Readers Question: How does an increase in imports cause inflation in the economy? If the quantity of imports increases, this should reduce domestic demand-pull inflation (AD = C+I+G+X-M). Therefore if consumers spend more on imports it will, ceteris paribus, reduce domestic demand. Therefore, we get lower growth of AD and lower inflation. Suppose there is an …
In 1976, the minority Labour UK government of James Callaghan was ‘forced’ to borrow $3.9 billion from the IMF to stabilise the value of Pound. The loan was also accompanied with conditions to cut public spending and raise interest rates. It marked a symbolic break with the post-war economic consensus and was a reflection of …
Readers Question: What is the cause of deflation? Deflation involves a fall in the price level – a negative rate of inflation. From a very basic standpoint, there are two main potential causes of deflation: A fall in aggregate demand (AD) A shift to the right of aggregate supply (AS) – i.e. lower costs of …
Economic stats, graphs and source of data My page with graphs Main ONS dataset Useful direct links Economic growth National income acc. Real GDP | % quarterly Inflation Inflation Time series CPI annual % Unemployment Labour market ILO % Current account b of p Trade C.A % GDP Budget deficit Public finances at ONS PSNB …
An explanation of what happens if there are net outflows of money from a country. Impact on: Real GDP (tends to fall) Employment Exchange rate – exchange rate will fall Balance of Payments – debit on financial account Confidence – if big outflows it can cause a negative spiral of declining confidence. Government debt – …
Readers Question: my question is whether economic instability means high and fluctuated inflation, employment and unsustainable growth or has other definition? Economic instability can take various forms. In recent years, we have witnessed a few examples of this. The main types of instability are: Inflation – The cost-push inflation of the 1970s. In extreme cases, …
Due to lack of space in the book, we have published full bibliography on this website. Bibliography Chapter 1 Is it OK to be selfish? Frank, R H (1988) Passions Within Reason: The Strategic Role of the Emotions, p. xi. New York: W W Norton & Co. Galbraith, J K (1982) “Recession economics”, The New …
Tight monetary policy implies the Central Bank (or authority in charge of Monetary Policy) is seeking to reduce the demand for money and limit the pace of economic expansion. Usually, this involves increasing interest rates. The aim of tight monetary policy is usually to reduce inflation. With higher interest rates there will be a slowdown …