Household saving is defined as income that is not consumed. Savings can be kept in cash form, saved in a bank account or saved in long-term assets, such as government bonds. Quick summary of factors that influence saving levels Interest rates – higher interest rates make saving more attractive. Rising income enables higher savings. People …
The gift economy refers to economic activity characterised by offering services and goods to other members of the community without the expectation of monetary reward. Giving things to other people may be based on pure altruism, a wish to gain status in society, the hope of reciprocal gifts in the future or out of a …
The Housing Market refers to the supply and demand for houses, usually in a particular country or region. A key element of the housing market is the average house prices and trend in house prices. Definitions related to housing market UK nominal house prices – actually monetary value – not adjusted for inflation Real house …
Government policies to increase economic growth are focused on trying to increase aggregate demand (demand side policies) or increase aggregate supply/productivity (supply side policies) Demand side policies include: Fiscal policy (cutting taxes/increasing government spending) Monetary policy (cutting interest rates) Supply side policies include: Privatisation, deregulation, tax cuts, free trade agreements (free market supply side policies) …
A carbon tax aims to make individuals and firms pay the full social cost of carbon pollution. In theory, the tax will reduce pollution and encourage more environmentally friendly alternatives. However, critics argue a tax on carbon will increase costs for business and reduce levels of investment and economic growth. The purpose of a carbon …
Definition – Supplementary goods are two goods that are used together. For example, if you have a car, you also need petrol to run the car. If you have a tv, a supplementary good would be an Amazon widget which allows you access to a much greater range of tv programmes. Examples of supplementary good …
Readers Question: What does the Government spend its money on? The government spends money for a variety of reasons: Reduce inequality (welfare payments like unemployment benefit). Provide public goods (fire, police, national defence) Provide important public services like education and health (merit goods) Debt interest payments. Transport Military spending UK public sector spending 2023-24 …
The fundamental economic problem is the issue of scarcity but unlimited wants. Scarcity implies there is only a limited quantity of resources, e.g. finite fossil fuels. Because of scarcity, there is a constant opportunity cost – if you use resources to consume one good, you cannot consume another. Therefore, an underlying feature of economics is …