Stop-go policies refer to macroeconomic policies which result in economic boom or recession. To manage the economy, the government can change monetary and/or fiscal policy, but the danger is that they might over-react and the economy can go from very fast ‘unsustainable growth’ to very slow/negative growth. Stop-go policies may be linked to the ‘political …
Readers question: Why cannot politics and economics be seen in isolation? Economics is concerned with studying and influencing the economy. Politics is the theory and practice of influencing people through the exercise of power, e.g. governments, elections and political parties. In theory, economics could be non-political. An ideal economist should ignore any political bias or …
Economics is a broad subject concerned with the optimal distribution of resources in society. Within the subject, there are several different branches which focus on different aspects. Also, there are different schools of thought which generally have different views on aspects of economics. The first way to split economics is microeconomics and macroeconomics. Microeconomics – …
Sustainable economic growth implies that the growth rate can be maintained over the long term. Sustainable growth involves both Environmentally sustainable growth – e.g. not exploiting scarce resources. Sustainable growth in terms of low inflation and a balanced economy. Sustainable economic growth The long-run trend rate of economic growth is the rate of economic growth …
Capital controls are government measures to limit the flow of financial capital and financial assets. Capital controls include limits on foreign currency exchange, limits on the purchase of assets and taxes on financial transfers. Some economists argue that capital controls can help limit destabilising capital flows which cause banking crisis and economic booms and busts. …
Sometimes governments may wish to reduce the value of their currency. A depreciation in the value of a currency would make exports cheaper, imports more expensive and can provide a boost to domestic demand. If the economy is stuck in recession or unemployment rising, reducing the value of a currency can help increase economic growth …
The Coronavirus has already led to disruption in manufacturing output, foreign travel and consumer demand. If the virus spreads and becomes a pandemic, what will be the likely economic effects? In short, a global pandemic will have a serious supply-side impact – especially on foreign travel, manufacturing and investment. The uncertainty and decline in travel …
One of the main issues in economics is the extent to which the government should intervene in the economy. Free market economists argue that government intervention should be strictly limited as government intervention tends to cause an inefficient allocation of resources. However, others argue there is a strong case for government intervention in different fields, …