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 …
Readers Question: To what extent can the subprime crisis affect the global financial market? The subprime crisis refers to the rising number of defaults on US subprime mortgages. Basically, US mortgage companies sold a lot of inappropriate mortgages to people on low income and poor credit histories. Rising interest rates, and falling house prices are …
But, do they deserve it? Last year, Shell made profits of $27.6bn (£14bn). This equates to profits of about £1.5 million per hour – which by any stretch of the imagination is not a bad hourly earning. The profits have been criticised by trades unions, environmentalists and motoring organisations. Motoring organisations claim that petrol is …
Readers Question: Does mortgage equity withdrawal enhance economic growth? There is good evidence that mortgage equity withdrawal can lead to higher levels of consumer spending and economic growth Definition of Mortgage equity withdrawal – Mortgage equity withdrawal occurs when homeowners remortgage taking out bigger loans to take advantage of rising property values. Suppose you bought …