Most European countries have embarked on a range of austerity measures designed to reduce their budget deficits. Why have austerity measures been pursued with great vigour in Europe? What is impact of austerity measures on economic activity? Why Austerity? Pressure from Bond Markets. Investors have become nervous about holding debt in several Euro-zone countries. This …
Readers Question: There just seems to be many paradoxical actions taking place in markets and economies at the moment. How do we explain? Paradoxes of UK economy Low interest rates have not increased spending / economic growth Despite recession, inflation has been above target. Despite recession and depreciation of Pound, current account deficit increased in …
What are the Global Imbalances? US ran a large and persistent current account deficit (imports higher than exports) of up to 6.5% of GDP in 2006 Diagram of Current Account Surplus / Deficit in US and rest of world source: (1) 2. China ran a large current account surplus, accumulated foreign reserves, kept Yuan undervalued …
Perfect competition is a market structure with the following features Many buyers and sellers – 1000s of firms. Freedom of entry and exit into the market Homogenous good Perfect information In a way, stock markets are an example of perfect competition. There are hundreds of buyers and sellers. When buying shares you can choose from …
Readers Question: Economics is a social science, it contains graphs, diagrams and statistics to make strong evaluations and at university level it also often seems to have a strong Maths content which allows for even stronger analysis, calculation of events and evidence of theories. So how is it possible that often economic events such as …
Readers Question: Are People hungry because the world does not produce enough food? No. Essentially it is a problem of distribution. In particular, in developing countries, many people lack sufficient income to buy enough food The United Nations, World Food Programme WFP, states 925 million people do not have enough to eat and 98 percent …
Readers Question: How is it possible for countries with massive debt to have a strong currency, e.g Japan and the US? Sometimes countries can have large debts that are sustainable. In the case of Japan and the US, the general consensus is that there is a very low risk of default. US debt is very …
An Overview of the Indian economy in 2012 and its prospects for the future. (Depressed by events in Europe, a look at an economy with a very different economic outlook). Summary In the past few years, the Indian economy has been growing rapidly – (e.g. 8.5%2010-11). However, this growth has led to an increase in …