In the past two decades, we have had a remarkable period of low inflation. Inflation has been so low, some economists have suggested a new paradigm – the end of inflation as a primary economic concern. Since 2009, any predictions of imminent inflation have proved to be wide of the mark. There have been warnings …
A look at factors affecting the demand and supply of housing. In summary. Demand-side factors 1. Affordability. Rising incomes mean that people are able to afford to spend more on housing. During periods of economic growth, demand for houses tends to rise. Also, demand for housing tends to be a luxury good. So a rise …
Demand-pull inflation is a period of inflation which arises from rapid growth in aggregate demand. It occurs when economic growth is too fast. If aggregate demand (AD) rises faster than productive capacity (LRAS), then firms will respond by putting up prices, creating inflation. Inflation – a sustained increase in the price level. Demand-pull inflation – …
HS2 is a proposed new railway line linking London Euston to Birmingham and in the second phase – Manchester, Leeds, Sheffield and eventually Scotland. Supporters of high-speed rail argue it is necessary to meet the UK’s rapidly growing demand for travel. High-speed rail will provide the greenest, safest and most efficient form of transport. The …
The wage-price spiral refers to the strong mutual link and between wage growth and inflation. Rising wages invariably put upward pressure on prices and inflation. High inflation creates upward pressure on wages as workers seek to gain an increase in wages to meet the rising prices and maintain living standards. Thus a wage-price spiral can …
Speculation occurs when individuals make decisions about buying or selling depending on expectations of future price changes. For example, if prices are rising speculators may take this as a sign that prices will continue to rise, and therefore, they buy more. This speculation causes prices to continue to rise. An example is house prices, where …
The next 12 months are going to see unprecedented demands on the government budget. It is likely GDP will fall 10-20% – if not more. On its own, this would lead to a surge in government borrowing Fall in income tax receipts as people earn less Fall in VAT and excise duties as people spend …
Supply and demand illustrate the working of a market and the interaction between suppliers and consumers. Supply and demand curves determine the price and quantity of goods and services. Any changes in supply and demand will have an effect on the equilibrium price and quantity of the good sold. It will also affect the incentives …