Readers Questions: hi would you please describe the current state of the UK Economy. The UK economy is undergoing a serious recession. These are the main macro economic indicators 1. Economic Growth. source: ONS In the last quarter (Q3 2008), GDP fell 0.5%. GDP is also forecast to fall this quarter. The UK economy is …
The price of a small (illogically called the ‘Tall’) Starbucks Cappuccino is now £2.05. The Venti now costs £2.65 (2008 prices) This year the price of Starbucks drinks have increased by more than the rate of inflation. Costa Coffe and Cafe Nero have both kept their prices below £2, but, industry analysts argue that it …
My students are generally pretty un-inventive when it comes to excuses for not doing homework. Popular excuses include: “I was doing business studies / geography / history coursework” “I had football practice” “I couldn’t be bothered” “I forgot” “You mean, I was given homework?” I have heard a few good ones though I was driving …
Readers Question: What is the relationship/theory between the OCR (Official Cash Rate) and Inflation? The Official Cash Rate is the interest rate the New Zealand Reserve Bank use to control inflation. It is very similar to the base rate used by the MPC, Bank of England. Graph Interest Rates New Zealand Because New Zealand commercial …
Readers Question: Could deflation lead to devaluation of the UK Pound? Deflation in the UK means prices fall. This hasn’t happened since the 1930s, but, if it did happen, it could lead to a further depreciation in Pound Sterling. Firstly, deflation would mean interest rates would likely fall to 0%. This fall in interest rates …
Readers Question: how does risk create an economic burden? Generally, people are risk-averse. For example, you may have a 0.1% chance of your house burning down. But, if it did burn down, the effects would be disastrous. Therefore, most people are willing to pay a premium to insure their house against this very unlikely scenario. …
Readers Question: What are CDOs? How do they work? Could you please explain in detail as I am very confused. CDOs are effectively a type of bond, which is backed by loans, other bonds or assets. Banks used CDOs to reduce the amount of debt on their balance sheet. One way to think of them …
Readers Question: what are the reason of dollar appreciation while the world economic situation is not good! i would apprecitae if you provide me a simple comprehensive answer. Many factors would normally make the dollar depreciate (fall in value) US interest rates cut to 1% US current account deficit US entering into recession Uncertainty over …