Definition: Cost-push inflation occurs when we experience rising prices due to higher costs of production and higher costs of raw materials. Cost-push inflation is determined by supply-side factors, such as higher wages and higher oil prices. Cost-push inflation is different to demand-pull inflation which occurs when aggregate demand grows faster than aggregate supply. Cost-push inflation …
Rising petrol, food and energy prices have pushed many households in the UK and around the world into an unprecedented cost of living crisis. In the UK, in March 2022 the ONS reports that 23% of households found it difficult to pay their monthly bills. The cost of living crisis is fundamentally caused by higher …
Generation rent is a term to describe those young adults (18-40) who have been priced out of the housing market – unable to buy and having to pay a high percentage of income on rent. As well as an expensive housing market, generation rent faces financial difficulties from high living costs, student loans and low …
Since 1980, China has experienced an economic miracle with over three decades of economic growth averaging over 10% a year. This growth has enabled millions of people to be lifted out of absolute poverty and for China to become one of the most dominant economies in the world. Problems facing Chinese economyWatch this video on …
The OBR has recently made a prediction that UK national debt could soar from the current 100% of GDP to 320% within 50 years. This bleak assessment is made with regard to factors such as demographic pressures, requiring higher spending on welfare and health care, plus recent geopolitical events and rising energy prices. In 2009, …
Readers Comment. Why doesn’t the Bank of England just print the money instead of borrowing the money? Printing more money doesn’t increase economic output – it only increases the amount of cash circulating in the economy. If more money is printed, consumers are able to demand more goods, but if firms have still the same …
Inflation is a period of rising prices. The primary policy for reducing inflation is monetary policy – in particular, raising interest rates reduces demand and helps to bring inflation under control. Other policies to reduce inflation can include tight fiscal policy (higher tax), supply-side policies, wage control, appreciation in the exchange rate and control of …
Inflation is generally controlled by the Central Bank and/or the government. The main policy used is monetary policy (changing interest rates). However, in theory, there are a variety of tools to control inflation including: Monetary policy – Higher interest rates reduce demand in the economy, leading to lower economic growth and lower inflation. Control of …