Different transport modes have a habit of being replaced. The horse and cart lasted uncontested for quite a few centuries. But, in the eighteenth century, the advent of the canal opened up a whole new mechanism for transporting large quantities of goods. It was the canals that helped Britain’s manufacturing base become a world leader. …
Readers Question: I have a hunch that Keynesian responses to recession work best in industrial countries such as China and 1930’s USA as opposed to post industrial societies such as the US and UK. In the great depression consumption and production were, generally, in the same countries, e.g. cars produced in America would be consumed …
Readers Question From why inflation makes it easier to pay government debt 1. Why will wages increase with inflation? There is no law that inflation will automatically lead to higher nominal wages. It is possible for inflation to be higher than the nominal wage growth. In this case, workers see a fall in real wages …
Readers Question: How likely are we to go into a double dip recession? There are many reasons to be gloomy about the current global economic prospects. A technical recession involves two consecutive quarters of negative economic growth. We may avoid this actual fall in GDP, but we will definitely experience below trend economic growth – …
Standard & Poor downgraded the US fiscal position from AAA to AA. This reflects the credit rating agencies believe that the US fiscal position has deteriorated and they are more pessimistic over long term fiscal consolidation in the US. It means that the rating agency feels the threat of US defaulting on its federal debt …
Readers Question: What would happen if India was the only exporter of gold? India would have a monopoly in the export of gold. Given the recent increase in the price of gold, this would lead to a significant increase in foreign exchange earnings for India. If the export of gold was controlled by India, it …
In one sense the US is facing a debt crisis. The level of government borrowing has risen sharply as a % of GDP, and given current spending commitments, the forecast for borrowing is to continue to grow. Nevertheless, despite disputes over raising debt ceiling, the US doesn’t currently face a crisis like Greece or other …
Definition of Oligopsony occurs when a few firms dominate the purchase of factors of production. This means that the few firms have considerable market power in paying low prices for inputs.