Yesterday, I wrote this piece on the demand for housing Usual demand curve Basically we noted the phenomena that rising house prices often cause an increase in demand and falling house prices cause lower demand. This seems to contradict the basic law of demand. But, I suggested this was due to shifts in the demand …
Readers Question. Could you give any more information on how you think consumer buying habits will be affected by the credit crunch moving into 2009. Obviously people are spending less nowadays and tightening their purse strings. Will this continue into 2009? Will we see the birth of a new type of savvy consumer who knows …
Readers Question: How could you calculate the price elasticity of demand for petrol in the united states when the figure is 0.48? To calcuate the elasticity of demand, we divide the % change in quantity by the % change in price. For example, if the price of petrol in the US increased by 60% …
Readers Question: What credit can the adoption of central bank independence take for the relative stability of the UK business cycle since 1997? The MPC, Bank of England, are responsible for setting interest rates and determining UK monetary policy. They seek to keep inflation close to the government’s target of CPI 2% +/-1 % Between …
Readers Question. Explain how interest rates could be used to boost the economy. Why, then do the govenment frequently hesitate to take such steps. Interesting Question. Generally, lower interest rates help increase consumer spending, investment and economic growth. Lower interest rates help increase Aggregate Demand for various reasons. Lower interest rates make borrowing cheaper encouraging …
Evaluate the importance of managing aggregate demand (AD) to bring about a sustained reduction in the rate of unemployment in the UK economy. In 1992 Unemployment in the UK rose to 3 million. A significant part of this unemployment this was due to the recession of 1992. In a recession, demand deficient unemployment will increase. …
The first admission about writing on the economic policies of Donald Trump is that nobody can be entirely sure what it will be – perhaps even Donald Trump himself. Campaign promises are one thing, but the reality of a Republican controlled Congress, may be something else. I don’t think it unreasonable to think that the …
Between 1991 and 1998, Russian GDP fell an estimated 40%. The transition to a free market economy was plagued by hyperinflation, rising poverty, falling life expectancy and social dysfunction. Whilst the average citizen saw a marked deterioration in the quality of life, a few oligarchs became intensely rich as they bought state assets at a …