The economic trade cycle shows how economic growth can fluctuate within different phases, for example: Boom (A period of high economic growth usually causing inflation) Peak (top of the trade cycle, where growth rates may start to fall) Economic downturn/recession (where the growth rate falls and may become negative – leading to a fall in national output) …
The fiscal multiplier effect occurs when an initial injection into the economy causes a bigger final increase in national income. Suppose the government pursued expansionary fiscal policy. The aim of expansionary fiscal policy is to increase aggregate demand (AD) and boost the rate of economic growth. This could involve the government increasing public sector investment …
A look at the economic impact of an increase in the supply of female workers in labour markets. In summary: Increased female labour market participation will lead to increase in supply of labour, and in theory, could lead to lower wages. However, a gradual increase in female labour market participation is often in response to …
Readers Question: Why do foreigners often hold U.S. dollars? How does the holding of dollars by foreigners affect the welfare of American? The Dollar still is the world’s reserve currency. With about 67% of the world’s currency reserves held in dollars. Up until the First World War, the British Pound was the most widely accepted …
Evaluation is the ability to look at issues from a critical perspective; to look at other potential outcomes. Evaluation questions will typically begin with words like, discuss, evaluate, to what extent, assess. These are some ways to get evaluation marks for microeconomics. (note there are potentially more ways to evaluate but this gives a few …
Readers question: What is the difference between tax and inflation? Tax is a way for the government to raise revenue. It includes charges placed by the government on goods/income. For example, VAT is a tax which means consumers have to pay an additional 20% of the price in the form of tax which goes to …
A look at the benefits and costs of capital flows.
An inflation target means the Central Bank has the objective to use monetary policy in order to keep inflation close to an agreed level (e.g. 2%) If inflation is forecast to rise above the target, they are likely to increase interest rates to moderate demand and slow down inflationary pressures. If the Central Bank is …