The output gap is a measure of the difference between actual output (Y) and potential output (Yf). A positive output gap means growth is above the trend rate and is inflationary. A negative output gap means an economic downturn with unemployment and spare capacity The output gap = Y- Yf Diagram for Output Gap The …
Biflation is a term used to describe a period where some prices are rising and some prices are falling. It can appear we have both inflation and deflation at the same time. CPI = Headline inflation rate CPI less food and energy = underlying or core inflation. In the above example, the headline rate is …
Readers Question: What will happen to the value of a currency during times of deep recession and high inflation? There is no hard and fast rule about what will happen to the value of a currency during a deep recession – though, a currency is likely to fall because country becomes a less attractive place to …
The Balance of Payments is a record of a country’s transactions with the rest of the world. It shows the receipts from trade. It consists of the current and financial account. UK current account 1955-2018 1. Current account This is a record of all payments for trade in goods and services plus income flow it …
Readers Question: What are the types of unemployment? Firstly, we can make a distinction between: Supply-side unemployment (the natural rate of unemployment). These are usually microeconomic imbalances in labour markets. Demand-side unemployment (Unemployment caused by lack of aggregate demand in the economy). In recessions, we can expect demand deficient unemployment (sometimes called cyclical unemployment) to …
Global warming is a major economic and social problem facing the world. One study by Swiss Re, a provider of insurance suggested global warming could cost $23 trillion in lost output by 2050. In addition to the economic costs are perhaps the much more important costs to the environment, natural habitats and the life chances …
Definition – Collective bargaining refers to the negotiations between a group of workers and firms. Workers, usually through a trade union, form a unified approach to negotiate wages and work conditions with their firm (or group of firms). Collective bargaining can involve many different aspects of work – including pay, health and safety, working hours, …
Readers Question: This is hypothetical, but I wondered what would happen if we developed robots resembling humans who could perform any task a human could perform, but more effectively and essentially for free? More specifically, how would this development affect employment and real per capita GDP, and what would the pros and cons be? What …