Should we increase tax on cars?

Should we increase tax on cars?

Readers Question: over the next 10 years, should the government make greater or lesser use of measures such as road pricing or taxes on fuel to reduce road use? In the UK, road use creates many external costs. This includes increased pollution, congestion, and accidents. Therefore, the social cost of driving is greater than the private cost. In a free market, this leads to over-consumption, (people ignore external costs when deciding whether to drive). This causes economic costs such as lost output due to congestion. Therefore, there is a good…

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Funny Typos in Interview Letters

“I have a graduate degree in unclear physics.” (I never understood physics either) “I worked for 6 years as an uninformed security guard.” (ignorance is bliss) “My last role was a plumbing and hating specialists.” • “The academic scholarship I earned came with a plague.” (the cost of university is really too high these days) • “Most of my experience to this point has been as a blue-color worker.” (was it very cold) • “As part of the city maintenance crew, I repaired bad roads and defective brides.” (I’m sure you had your work…

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Why House Prices in the UK are Falling 2008

The state of the UK housing market seems to get as much coverage in the newspapers as just about every topic, bar the latest escapades of Britney Spears driving through a traffic light. From inches of press coverage, it appears that a fall in the rate of UK house price inflation is vastly more significant than a cyclone in Bangladesh, claiming the lives of 10,000 people. Anyway, the evidence does suggest the housing market is slowing down. With several reports showing a fall in house prices in recent months. The first…

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How Much Would You Pay for Cigarettes – $222?

When we buy a packet of cigarettes for $8, we may think that this is the personal cost. But, a new study claims the real personal and social cost of smoking a pack of cigarettes is closer to $200. pdf of report – Report by Kip Viscusi and Joni Hersch To arrive at these statistics they look at the likelyhood of early death from cigarettes. Smoking is generally assumed to reduce life expectancy by a number of years. However, smoking can also reduce quality of life, from an early…

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Recession In US and Euro Zone

How would a recession in the US and EU affect the UK economy? Over 75% of UK trade is with the US and EU. Therefore, a recession in these countries would have a significant impact. Firstly, UK exports to these countries would fall. Therefore, the UK is likely to have a fall in AD, (or at least lower growth) Therefore, the UK would experience a lower rate of economic growth. The impact of this fall in exports will depend upon several other factors. The impact will depend upon other factors affecting UK…

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Interest Rates to Fall in 2008

Yesterday, the Bank of England kept interest rates constant at 5.75% for the fourth consecutive month. However, it looks increasingly likely that the base rate will fall in 2008, possibly to 5%. Every three months the Bank publish an inflation report, which is a forecast for inflation over the next couple of years. Despite recent factors causing cost push inflation (oil prices, fuel prices) the outlook for inflation is forecast to be benign. The Bank predict that CPI inflation will be close to the government’s target of 2% by 2009. Other economic…

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Preparing for Economics Interview at Oxford

Readers Question: what do I need for an interview of “Economics and Management” course or PPE course in Oxford ? I have written one article here with some general advice for preparing for an interview at Oxford For Economics and Managemanent or PPE. I would suggest the additional pieces of information 1. Read Outside Syllabus Make sure you have read, at least, a couple of economics books which go beyond the A Level syllabus. This might be the popular Freakonomics, or something by Paul Krugman . There is no guarantee that…

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The Role of Aggregate Demand in Reducing unemployment

Evaluate the importance of managing aggregate demand (AD) to bring about a sustained reduction in the rate of unemployment in the UK economy. In 1992 Unemployment in the UK rose to 3 million. A significant part of this unemployment this was due to the recession of 1992. In a recession, demand deficient unemployment will increase. This is because as firms close down they have to lay off workers. Other firms, may stay in business by not hiring new workers or laying off…