Last week the UK economy slipped into recession. But, was it avoidable? Why are interest rates not coming down when households are facing the greatest squeeze on incomes for a generation? Although inflation is falling it is still above the inflation target, but it is a mistake to prolong a recession, when inflation is expected …
Wheat is the fifth most commonly traded commodity after oil, coffee, gas and gold. It accounts for approximately 21% of the world’s food and the gross world trade in wheat is greater than all other crops combined. Wheat is a key ingredient of bread, flour, and pasta, and is also used in the production of …
The price of natural gas is determined by several supply and demand factors. Source: IMF Commodity prices (look for left column – excel database) The sharp increase in the price of natural gas in 2021/22 reflects concerns over the availability of supply from Russia and the economic recovery which has led to greater demand. Since …
The demand for a good depends on several factors, such as price of the good, perceived quality, advertising, income, confidence of consumers and changes in taste and fashion. We can look at either an individual demand curve or the total demand in the economy. The individual demand curve illustrates the price people are willing to …
Investment is expenditure on capital goods – for example, new machines, offices, new technology. Investment is a component of Aggregate Demand (AD) and also influences the capital stock and productive capacity of the economy (long-run aggregate supply) Summary – Investment levels are influenced by: Interest rates (the cost of borrowing) Economic growth (changes in demand) Confidence/expectations …
The size of current account deficit/surplus is affected by several factors including: Exchange rate (overvalued exchange rate would cause large deficit) Level of consumer spending (economic growth) and hence import spending Capital flows to finance deficit in long-term Saving rates – influencing level of import spending Relative inflation/competitiveness The current account measures: The balance of …
Supply refers to the quantity of a good that the producer plans to sell in the market. Supply will be determined by factors such as price, the number of suppliers, the state of technology, government subsidies, weather conditions and the availability of workers to produce the good. Movement along the supply curve As price increases …
Readers Question: why some countries are more successful in attracting Foreign Direct Investment than others? Foreign direct investment (FDI) means companies purchase capital and invest in a foreign country. For example, if a US multinational, such as Nike built a factory for making trainers in Pakistan; this would count as foreign direct investment. In summary, …