The Dutch disease refers to the problems associated with a rapid increase in the production of raw materials (like oil and gas) causing a decline in other sectors of the economy. When the raw materials run out, the economy can be in a worse position than before. – Can the discovery of substantial raw materials …
Definition The observation that some goods (e.g. water) which are more essential to human life can be cheaper than non-essential goods (e.g. diamonds) Paradox of value – Economics explainedWatch this video on YouTube Explanation The paradox of value examines why goods that are not essential to life can command a much higher price than goods …
One of the great events in European economic history was the great plague of the 14th Century. The Black Death, which swept across Europe (killing up to 30% of citizens), led to a profound change in economic circumstances. Due to the shortage of labour, peasants were freed from their serfdom. With great demand for labour, …
Markets are places where buyers and sellers can meet to sell and purchase goods and services. Markets provide places for firms to sell their goods and gain revenue. Markets provide places for consumers to buy the goods and services that they need. Markets are mostly self-regulated, relying on the principles of supply and demand to …
Definition – Collective bargaining refers to the negotiations between a group of workers and firms. Workers, usually through a trade union, form a unified approach to negotiate wages and work conditions with their firm (or group of firms). Collective bargaining can involve many different aspects of work – including pay, health and safety, working hours, …
Definition Wage-push inflation is the increase in general price level resulting from higher wages in an economy. Explanation of wage-push inflation If firms increase nominal wages by 5%, they experience higher costs of production. This is likely to cause firms to pass the cost increases onto consumers in the form of higher prices. Firms increase …
By different measures, US corporate profit has increased significantly in the past two decades. It stands at 10.5% of GDP. What is behind the large rises in profit? Source St Louis Fed CP (not this is for nominal profit) In 2021, US corporate profit after tax stands at 2,700 billion (or $2.7 trillion) This is …
Since the 1970s, we have seen a fall in average global inflation rates. There have been periods of inflation (often due to rise in oil prices), but the overall trend has seen much lower inflation rates. In the 1970s, inflation was seen as one of the main macro-economic challenges, but now many feel the challenge …