Oil prices tend to be volatile for a few reasons. Demand varies with the economic cycle. Changes in the price of oil can be magnified by speculators who buy forward contracts Supply is quite inelastic in the short-term. Therefore, a small change in demand can have a significant impact on the price. Firms and consumers …
Degrowth is a political and economic theory which emphasises changing priorities of society from economic growth and production to a society based on sustainability, well-being, concern for environment and co-operation. The motives for pursuing degrowth include the need to provide environmental sustainability for the long-term and improve quality of life. Critics argue degrowth is a …
Economies face many events that cause firms and consumers to adjust their behaviour. New technology, demand-side shock, supply-side shock all cause a change in the priorities of the economy. In theory, the price mechanism will lead to a smooth reallocation of resources as capital and labour are deployed from unproductive areas to new areas. Some …
A fall in oil prices should cause a reduction in transport and fuel costs for firms. Consumers who will also benefit from the lower prices of transport and fuel. The lower oil prices will effectively increase their disposable income and enable them to spend more on other goods Because oil is the most traded commodity …
Readers Question: What is the difference between monetary and fiscal policy? Monetary policy involves changing the interest rate and influencing the money supply. Fiscal policy involves the government changing tax rates and levels of government spending to influence aggregate demand in the economy. They are both used to pursue policies of higher economic growth or …
In a recession, you would usually expect a fall in the inflation rate due to lower demand and lower economic activity. The inflation rate fell in major recessions like 1929-32, 1981, 1991 and 2020.. However, it is not guaranteed inflation will fall in recession. For example, we could have a period of stagflation – rising …
UK Minimum Wage The National minimum wage rate is currently £8.72 for workers over 25 (from April 2020). The minimum wage was introduced in April 1999 (at £3.60) and is the legal minimum that employers can pay. The aim of the National Minimum Wage is to help increase incomes of the low paid. It has …
During the Great Depression, US unemployment rate rose from virtually 0% in 1929 to a peak of 25.6% in May 1933. This was the equivalent of 15 million people unemployed. Though this unemployment rate also excluded those on reduced hours or migrants/women not eligible to officially sign on for benefits. The unemployment caused serious economic …