Recently, I posted about the current fall in M4 lending in the UK. The concern is that fears over possible future inflation are preventing decisive action to promote economic recovery. But, these fears are misplaced. The fall in M4 lending in the UK is a sign of a fundamental weakness in demand. Given this weakness, …
Readers Question: I have been interested in the US economy in the last few months, and with current news of their $14 trillion debt problem heating up, I’m wondering could the demand for dollars go down, if they were possible to have a similar or close problems of debt issues like Greece, and if the …
Source: ONS This graph shows how inflation rates for different categories can vary enormously. Firstly, gas and electricity prices are by far the most volatile. This reflects the volatile nature of supply, it also reflects the fact demand and supply are inelastic. See: volatile food prices for the economic theory behind this volatility. Despite the …
I woke up this morning to the site of 8 inches of snow. My first thoughts were great! – no school today. (teachers enjoy a day off as much as students). Quite a few county councils have been alarmed at how quickly their stocks of salt for gritting the roads has dwindled. There appears …
Readers Question: I have been learning about inflation for AS at the moment. I would like to know about whether inflation would be a short-term phenomenon as we were told inflation takes place when there is excess demand and price will rise, it will also encourage the company to produce more. Therefore, shouldn’t it be …
Readers Question Can you tell me: Is speculation on a hot real estate market a counterexample to the law of demand or indirect evidence of it? The Law of Demand One of the first things you learn in economics is the basic law of demand – When prices rise, people buy less. When prices fall, …
There is an interesting article in the Economist about immigration and the impact on the Irish economy. Immigration tends to encourage a range of emotive responses, but, its impact on the flexibility of labour markets is worth considering. In the boom years, Ireland was growing by up to 5% a year or more. Growth was …
Why is monetary policy easier to conduct than fiscal policy in a highly divided national political environment? Monetary policy is usually implemented by independent monetary authorities. For example, in UK, monetary policy is implemented by the Monetary Policy Committee of the Bank of England. Therefore, they can take politically unpopular decisions such as increasing interest …