Readers Question: Which is more useful for determining living standards – GDP/capita and GDP/working hour GDP per capita measures national income per population GDP per working hour measures national income / total hours worked in the economy. source: US Bureau of labour statistics GDP per capita would probably be the first measure to look at. …
Definition deflationary gap – This is the difference between the full employment level of output and actual output. For example, in a recession, the deflationary gap may be quite substantial, indicative of the high rates of unemployment and underused resources. A deflationary gap is also known as a negative output gap. Causes of deflationary gap Fall …
The oil price is determined by supply and demand side factors. Rising oil prices are indicative of rising demand and/or shortages of supply. The oil price is also affected by market speculation. Rising Demand Increasing demand will push up the price of oil. A short-term rise in demand could lead to a significant increase in …
A look at whether we actually need economic growth in a modern economy. Readers Question: When I compare my life with my fathers at that time the conditions are near identical in the greater things or life. I work the same hours, maybe more. I have the same holidays. I have a similar standard of …
Explanation of why government intervention to try and correct market failure may result in government failure. Summary Market failure is a socially inefficient allocation of resources in a free market. Market failure can occur for various reasons Externalities Demerit/merit goods Public goods Monopoly power Government failure occurs when government intervention results in a more inefficient …
Definition of Ricardian equivalence This is the idea that consumers anticipate the future so if they receive a tax cut financed by government borrowing they anticipate future taxes will rise. Therefore, their lifetime income remains unchanged and so consumer spending remains unchanged. Similarly, higher government spending, financed by borrowing, will imply lower spending in the …
Abstract. A look at the economic effects of Britain leaving the European Union. Summary. The UK has been a member of the European Union since 1973. The European Union gives many economic benefits to member countries. These include free trade, inward investment from European companies, free movement of labour, harmonisation of regulations and qualifications and …