I often hear of arguments saying bottles of mineral water should be banned. The logic of banning bottled water is that it is a strong commitment to reducing single-use plastic which has high environmental costs. However, others argue it is a rather drastic measure which only tackles small part of the problem. Reasons to ban …
To what extent does an increase in profit lead to an increase in economic welfare? In summary. Higher profit enables firms to invest in more research and development, leading to better products in the long-term. Higher profit also acts as a signal to other entrepreneurs to increase investment in that industry. However, others are concerned …
Readers Question: How does the MPC predict future inflation? Inflation is caused by a mixture of demand-pull and cost-push factors. Therefore, the MPC will look at many statistics which give an indication of whether the economy is reaching full employment and causing inflationary pressures. This will include rate of economic growth, unemployment and the amount …
Readers Question: Can inflation cause a recession? Inflation is not the main cause of recessions. Usually, recessions are caused by factors such as high-interest rates, fall in confidence, fall in bank lending and decline in investment. However, it is possible that cost-push inflation can contribute to a recession, especially if inflation is above nominal wage …
The economic cycle plays an important role in macroeconomics. Typically every 8-10 years, there is a recession (fall in output) or at least an economic downturn. Recessions tend to last for between six months and up to 2 or 3 years. But, even the deepest recession tends to end and the economy returns to a …
Debt is one of the oldest financial instruments, but is it good or bad? To some debt is a sinful way of living beyond your means. Debt is an instrument which increases inequality and can cause economic hardship because of the fixed repayment costs. Furthermore, others point to debt as one of the main causes …
Stakeholders are groups of people who are involved or affected by a particular business. The main stakeholders of a business are: Shareholders – people who own shares in the company Employees – workers employed by the company Customers – People who buy and use the products the firm makes Suppliers – Firms who sell raw …
The difference between CPI and PCE seemed relatively insignificant. However, a big issue is the difference between CPI and Core CPI. CPI is the consumer price index. A measure of the cost of living for the typical person. Core CPI is the CPI – energy and food prices. Energy and food prices are removed because …