This shows the ratio of liquid assets relative to total assets. It shows that in 2008, banks had a very low % of liquid assets to total assets. A liquid asset is something that can easily be converted into cash. An illiquid asset is something like a house, it is worth money, but takes time …
Personal debt in the UK fell for the first time since records began in 1993. Personal borrowing fell by £600m in July, taking the total owed by individuals down to £1.457 trillion. Personal debt still exceeds total UK GDP. The main cause of the fall in personal borrowing was homeowners who were able to repay …
As output falls, you would expect a rise in unemployment. If output is lower, firms will need less workers. Okun’s law is a look at the relationship between falling output and rising unemployment. As a rough rule of thumb, in Okun’s original statement of his law, he found a 3% increase in output corresponded to …
An interesting graph showing relationship between the output gap and levels of government borrowing. A negative output gap indicates GDP is below full capacity and there is unemployed resources. Therefore, in a deep recession, like 2009, the output gap will rise. In a boom, we will have a positive output gap as firms struggle to …
Readers Question: How much money should 18 year old have? I have been thinking about this for a while and was hoping you might be able to shed some light on the subject. Please help. Thank you in advance. There are frequent readers comments about the minimum wage for 16-18 year old Most seem to …
Readers Question: discuss whether economic actions by individuals always results in net benefit to the society “Many other cases, led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for the society that it was not part of it. By pursuing his own …
Readers Question: When will the Recession end? Sometimes when it comes to making economic predictions, I am happy to stick my neck out. But, when it comes to predicting when we will see a sustained economic recovery, I find it quite difficult at the moment. In theory, the recession will have ended when we return …
Readers Question: However I was intrigued by something I read on the internet regarding Conservative plans to include housing costs in the Bank of England’s inflation target. Mortgage interest payments are included in the RPI measure of inflation. However, the official measure of inflation is currently the CPI. The CPI excludes mortgage interest payments. It …