In economics, the definition of investment is quite strict. Investment means an increase in the capital stock – Gross fixed capital formation. Investment can involve The purchase of a larger factory The purchase of new automated machines to take part in the productive process. The purchase of new computers in a bank. The building of …
Definition of Hedging – Setting up an investment positions which helps to protect against losses from a related investment. For example, if you export goods to the US, an appreciation in the exchange rate can make your exports uncompetitive. Therefore, you can hedge against your position by buying Sterling futures. If sterling appreciates, your exports …
Q. Use economics and political theory to explain why the fire and rescue service should be provided by the state. I don’t want the answer….I just don’t understand what this means. This revolves around a fundamental debate in economics – How much should the government intervene in the economy? Ideally, goods and services would be …
Sticky inflation is an undesirable economic situation where there is a combination of stubbornly high inflation, (and often stagnant growth). Sticky inflation is often associated with cost-push factors, i.e. factors which cause a rise in the inflation rate but also lead to lower spending and economic growth. Sticky inflation is also sometimes known as Stagflation …
Back in March I wrote this essay – Is the US heading towards recession? According to some doom mongers the US is already in recession. They point to the ‘collapsing’ housing market and the rise in ‘repossessions’ The irony is that US economic growth has remained unexpectedly high at 4.9% in 3rd quarter of 2007. …
Readers Question: What counts as an import on the Balance of Payments? Current Account measures trade in: Goods, Services, Investment incomes Net Transfers A Debit on the credit account occurs when the UK imports goods and therefore money flows from the UK to oversees to purchase it. If debits are greater than credits the UK …
Amidst all the gloom surrounding global credit markets and house prices, it is easy to forget some of the strengths and developments in the UK economy. One of the most remarkable features of the UK economy is the sustained reduction in unemployment. Falling from a peak of 3 million in 1992, the official method of …
Readers Question: What will happen if OPEC continued to increase oil prices? Firstly, the rise in the price of oil is not just due to the activities of OPEC. It is partly due to the rising demand from countries such as China. If OPEC continue to contribute to higher oil prices in 2008 it would …