Recessions (a fall in real GDP) are primarily caused by a fall in aggregate demand (AD). A demand-side shock could occur due to several factors, such as A financial crisis. If banks have a shortage of liquidity, they reduce lending and this reduces investment. A rise in interest rates – increases the cost of borrowing …
Russia is a medium sized economic with a GDP of $1.48 trillion (USD) about half the size of the UK $2.7 trillion (2020) The strengths of the economy is based on exports of oil and natural gas. And with these sales, since 2014, Russia has built up foreign currency reserves of $630bn – a large …
Economic sanctions are policies designed to hurt the economy of a target country. Sanctions can involve trade embargoes, seizure of assets, travel bans and limits on capital flows. The aim of sanctions is usually to provide a political signal of disapproval which stop short of military action. They can be imposed by one country unilaterally, …
Putting aside the very real human cost, war has also serious economic costs – damage to infrastructure, a decline in the working population, inflation, shortages, uncertainty, a rise in debt and disruption to normal economic activity. From some perspectives, war can appear to be beneficial in terms of creating demand, employment, innovation and profits for …
Inflation is a sustained rise in prices and increase in the cost of living. The general costs of higher inflation will be reduced purchasing power of money, fall in the value of savings, a depreciation in the exchange rate, less certainty for firms and the inconvenience of dealing with changing prices. In addition, developing economies …
Readers Question: Why is the cost of living in the UK so expensive? The cost of living depends on: The price of basic necessities – food, fuel, heating, transport, housing/rent, entertainment. The effective cost of living also depends on real wages. It is expensive to live in Nordic countries, but real wages tend to be …
External debt is the total public (government) and private debt owed to non-residents repayable in internationally accepted currencies, goods, or services. This is gross (total) external debt. It does not measure net debt. External debt is different to measures of public (government) debt. See: List of national debt by country. Some countries with very high …
Definition of stagflation Stagflation is a period of rising inflation but falling output and rising unemployment. Stagflaton is often a period of falling real incomes as wages struggle to keep up with rising prices. Stagflation is often caused by a rise in the price of commodities, such as oil. Stagflation occurred in the 1970s following …