Readers Question: Does job creation come from public or private sector? The public sector is government (national and local). Public sector jobs include doctors, police, teachers and civil servants. The private sector is private enterprises – retail, manufacturing, local services. Public sector jobs as a share of total employment UK 23.5% (2013) US 14.6% (2008) …
Intertemporal equilibrium is a concept which states economic agents make decisions taking into account the present and future time periods. At a particular point in time an economy may not be in equilibrium because individuals do not just decide based on the current situation, but also take into account for what may happen in the …
The aims of fiscal and monetary policy are similar. They could both be used to: Maintain positive economic growth (close to long-run trend rate of 2.5%) Aim for full employment Keep inflation low (inflation target of 2%) The principal aim of fiscal and monetary policy is to reduce cyclical fluctuations in the economic cycle. In …
Living standards vary significantly across the globe. Wealthy economies, such as the US have an average GDP per head (at PPP) of $59,495 in the US (IMF 2017) This compares to an average annual income as low as $808 Burundi. (IMF 2017) There are many reasons for these divergences in income including – historical trends, …
What factors enable a firm to grow in size? Internal expansion When a firm increases size through increasing production and sales. External expansion – When the firm grows through a merger with another firm. Internal expansion can involve Cutting price to increase sales and gain more market share. This may make the firm less profitable …
Trading blocks are groups of countries who form trade agreements between themselves. Trading blocks can include Free trade areas – elimination of tariffs between economies in the trading block Customs union – free trade area + a common external tariff with non-members Economic union/Single market – Customs union + common rules and regulations. Different types …
Cobweb theory is the idea that price fluctuations can lead to fluctuations in supply which cause a cycle of rising and falling prices. In a simple cobweb model, we assume there is an agricultural market where supply can vary due to variable factors, such as the weather. Assumptions of Cobweb theory In an agricultural market, …
Definition of Capital accumulation This is the process of acquiring additional capital stock which is used in the productive process. Capital accumulation can involve Investment in physical fixed capital (e.g. factories, machines) Portfolio investment – purchase of bonds, shares and cryptocurrencies Investment in assets, such as housing. Measuring capital accumulation Capital accumulation can be calculated …