Readers Question: Explain the terms monetary policy and fiscal policy and compare the ways in which they influence the UK economy. Monetary Policy Monetary policy involves influencing the supply and demand for money through interest rates and other monetary tools. Monetary policy is usually conducted by the Central Bank, e.g. UK – Bank of England, …
Economic growth means an increase in real GDP. Economic growth means there is an increase in national output and national income. Economic growth is caused by two main factors: An increase in aggregate demand (AD) An increase in aggregate supply (productive capacity) See latest stats on economic growth Demand-side causes In the short term, economic …
How does a recession/economic downturn influence how firms will set the price of goods and services? A recession is a period of negative economic growth – falling real incomes and rising unemployment. In a recession, consumers are likely to have lower income and be more sensitive to prices. There is also the threat of unemployment …
A significant issue in the US political economy is the perceived transgressions of Chinese economic policy. These tend to revolve around: Undervalued Yuan – making Chinese imports cheaper Current account (trade) deficit. China exports more goods and services than imports – switching demand from US firms to Chinese firms. Copyright infringements and lack of intellectual …
A list of different types of economic goods. Income elasticity of demand and types of goods Income elasticity of demand (YED) measures the responsiveness of demand to a change in income. Normal good A normal good means an increase in income causes an increase in demand. It has a positive income elasticity of demand YED. …
Capitalism is an economic system characterised by: Lack of government intervention Means of production owned by private firms. Goods and services distributed according to price mechanism (as opposed to government price controls) Capitalism – pros and consWatch this video on YouTube Pros of capitalism “A society that puts equality before freedom will get neither. A …
With any new technology – especially electronic goods (TVs, computers, cameras), we tend to see a sharp fall in price over time. Initially, the new technology is very expensive, and a high percentage of disposable income, but over time, prices tend to fall considerably. There are a number of reasons to explain this fall in …
Definition of devaluation and depreciation A devaluation occurs when a country makes a conscious decision to lower its exchange rate in a fixed or semi-fixed exchange rate. A depreciation is when there is a fall in the value of a currency in a floating exchange rate. In general, everyday use, devaluation and depreciation are often …