Readers Question: From the current economic crises government has been slashing its base interest rates to now 2%. However, how would deflation which is currently being experienced in several countries mainly due to decreasing fuel prices affect the attempted recovery from this crisis? Deflation makes monetary policy much less effective. In fact, deflation can cause …
Readers Question: Using data and your economic knowledge assess the case for and against a government completely banning the sale and consumption of cigarettes. AQA (15) 1. Cigarettes are a demerit good. People underestimate the costs of smoking, e.g. lower life expectancy. It has been suggested that the true cost of a packet of cigarettes …
“Don’t Panic, Captain Mainwaring.” – Dad’s Army The famous catchphrase could perhaps be adapted to UK debt levels. The 1940s and 1950s, were an example of high debt, but, it didn’t cripple the UK economy, the 1950s proved to be a decade of full employment and was one of the longest periods of economic expansion …
The coalition expects 490,000 public sector jobs to be lost by 2014-15 as a direct result of its drastic spending cuts, Danny Alexander, the chief secretary to the Treasury, has accidently disclosed. (link to Guardian) In addition the spending cuts, wage freezes and job losses will have a knock on effect to the rest of …
Readers Question: Where is the US economy headed? Is it inflation or depression? Recently, Goldman Sachs predicted a rough year ahead for the US Dollar. They forecast the dollar may fall against Pound Sterling to $1.85 in 12 months. Against the Euro, they forsee it to fall to $1.55 in a year’s time. Exchange rates …
For many goods we expect the price to be determined by market forces – by supply and demand. For example, computers, cars, holidays, food e.t.c. However, there is another class of good where society dislikes the idea of prices being set by market forces. The best example is football tickets or Concert tickets. . In …
It’s the time of the year when many students are getting to start economics for the first time. It can be a little confusing with so many new concepts and words. But, if we had just one lesson, what could we teach about economics? Society wishes to optimise the distribution of resources. Economics considers how …
Definition of Fiscal Space – The difference between the current level of public debt and the level of debt that is sustainable and manageable. A key issue for many advanced economies is being aware of the level of government borrowing that is sustainable in the long term. Basically, how much can a government borrowing without …