Readers Question: In early American banking history, banks would issue banknotes to patrons that were supposed to be backed by gold and silver. My questions is, what did the patrons give the banks to get the bank notes, and why were many banks unable to make payment on demand when the patrons tried to exchange …
Readers Question Am I correct in assuming that electricity is an inelastic supply? Oil is in short demand, there are not many green/low emission replenishable supplies and in the short run this would explain the continued increase in prices for the consumer. I think that in the short term electricity supply is quite inelastic. When …
Readers Question: Use the ideas and theories you have encountered in your study of the macroeconomic business environment to assess the possible impacts on China of holding the Olympic games in Beijing in 2008. The Olympic Games will effect the Chinese economy in the following way. Increase in Tourism. This is a short term effect …
1) You say depreciation causes inflation for the three reasons you mention, but later, that in the long run, a higher rate of inflation will cause depreciation. So my first question is how are these two phenomena linked? Is ‘long run’ the key; i.e. it takes a prolonged high inflation to cause a devaluation, but …
OK, I have a question for you. This was the example which popped to mind as I was reading your entry. (price elastic products) Here in my Middle Eastern country, sheep are sold for meat. Each year, prior to the Festival of the Sacrifice (Muslim holiday where every family buys a sheep to butcher at …
Readers Question: an orange juice sells at $3 when sugar price rise, orange juice sells at $3.2 but why when sugar price drop, orange juice still $3.20? Why? Sugar is an ingredient in the price of orange juice, therefore if the price rises, firms pass on the cost increases to consumers. Because all the firms …
Readers Question. EVALUATE THE LIKELY ECONOMIC EFFECTS OF A FALL IN THE UK’S COMPETITIVENESS. I know some points, such as deficit on current account, slower economics growth etc. However, I don’t know how to evaluate and write a conclusion on this one. Can you please help me? This is definitely the more difficult part of …
Readers Question: how the unemployment and inflation is related to country’s economy If we take the example of the UK, we can see differing examples of how unemployment and inflation are related to a country’s economy. The key to this question is what causes unemployment and inflation. There are several different factors, but it is …