Readers Question: How about the case of cost push inflation like that of China? there’s high inflation and yet the economy is not operating at its full level of employment and due to the fact that its exchange rate is fixed, monetary policies would not be effective but fiscal policies would further increase unemployment. What …
Ireland has introduced an interesting law, which has placed a 15 cent tax on the plastic bag. Combined with an advertising campaign to make the plastic bag unacceptable, use has fallen between 90-94%. Within a few weeks, there was a visual improvement in the number of plastic bags littering the environment. Other countries such as …
Although, the government has tried for several months to avoid this option, Alastair Darling admitted that the government had decided to nationalise the beleaguered bank Northern Rock. It means the government is responsible for over £100m of mortgages and savings. What Nationalisation Means Shareholders are likely to get very little in compensation. They have threatened …
Readers Question: Interest rates are determined by the markets and not by the Bank of England-where’s the truth? An interesting question. Firstly, it is worth bearing in mind that there are different interest rates in an economy. Bank of England Base Rate. This is the most important interest rate because it is the rate at …
It is interesting to note that Ken Livingstone has introduced a higher rate of the London congestion charge for cars which have high levels of fuel consumption (band G vehicles, which emit more than 225g of carbon dioxide per km) These are said to make up 15% of cars. It is clear that the policy …
Equilibrium national income occurs where aggregate supply equals aggregate demand. An increase in equilibrium national income requires an increase in long-run aggregate supply and aggregate demand. Equilibrium national income and Keynesian Consumption function We can also show equilibrium national income using a Keynesian consumption function. In this case, an increase in domestic aggregate demand (C+I+G) …
You are welcome to ask questions on Economics. I will post the answer on this blog, for everyone to benefit from. I shall try to answer the economics question and / or point to other resources but please bear in mind. The replies will be guidance and not for duplication. Your essays should always be …
Graph showing Ratio of House prices to Incomes This graph shows an interesting increase in the ratio of house prices to income. It is well know that UK house prices have increased significantly since 1993. In some areas the house price increase has been at least 300%, since the early 1990s. However, since 1998, house …