A look at factors that determine bond yields. Firstly, bond yields have an inverse relationship with the price of bonds. If demand for bonds rises (and therefore price of a bond goes up), the yield goes down. A £1,000 bond that has an interest rate of 5% – means the government will pay £50 interest payment …
Between 2009 and 2015, the Bank of England has been authorized to create £375bn of assets by the creation of central bank reserves. This new money was used to purchase government gilts. The theory is that by creating extra money and buying gilts from financial institutions, there would be an increase in the money supply …
A look at different pricing strategies a firm may use to try and increase profitability, market share and gain greater brand loyalty. Types of pricing strategies General strategies Profit maximisation. One strategy is to ignore market share and try to work out the price for profit maximisation. In theory, this occurs at a price where …
Readers Question: What effect do interest rates (either a rise, fall or steadying) have on both monetary and real wages? I think I’ve got my head around it, but I’m looking for a nicely explain summary (understanding that there are probably a million of contributing factors that can lead to a million outcomes!) You are …
Readers Question: Identify and explain economic variables that may be affected positively by the economic slowdown. A recession is a period of negative economic growth. It is a period of higher unemployment, falling wages and higher government borrowing. It generally causes economic costs But does anyone benefit from a recession? Some people who may do …
Prices and incomes policy is an attempt by the government to set the rate of increase in prices and the rate of wage increases in the economy. The government do not seek to control individual prices but control the general rate of increase in prices and incomes. Price and incomes policy may involve ‘voluntary’ agreements …
Readers question: Why cannot politics and economics be seen in isolation? Economics is concerned with studying and influencing the economy. Politics is the theory and practice of influencing people through the exercise of power, e.g. governments, elections and political parties. In theory, economics could be non-political. An ideal economist should ignore any political bias or …
Economics is a broad subject concerned with the optimal distribution of resources in society. Within the subject, there are several different branches which focus on different aspects. Also, there are different schools of thought which generally have different views on aspects of economics. The first way to split economics is microeconomics and macroeconomics. Microeconomics – …