The negative multiplier effect occurs when an initial withdrawal of spending from the economy leads to knock-on effects and a bigger final fall in real GDP. For example, if the government cut spending by £10bn, this would cause a fall in aggregate demand of £10bn. However, the effect may be greater than the £10bn. If …
Supply and demand illustrate the working of a market and the interaction between suppliers and consumers. Supply and demand curves determine the price and quantity of goods and services. Any changes in supply and demand will have an effect on the equilibrium price and quantity of the good sold. It will also affect the incentives …
The highest rates of obesity in the world are found in the small pacific islands, Nauru, Cook Islands with close to 60% of the adult population meeting definition of obesity as measured by the BMI (body mass index) Excluding these small pacific islands (with very small population) the greatest levels of obesity are found in …
A list of different types of economic policies. Monetary policy Fiscal policy Supply-side policies Microeconomic policies – tax, subsidies, price controls, housing market, regulation of monopolies Labour market policies Tariff/trade policies Demand-side policies Policies for influencing aggregate demand and expenditure in the economy. This mainly involves fiscal and monetary policy. Fiscal policy Government changes to …
A tax is a charge levied by a government to raise revenue. The main types of taxes include Income tax – a percentage of income. Corporation tax – a percentage of a firm’s profit. Sales tax/VAT – an indirect tax on the sale of goods. Excise duties – taxes on alcohol, tobacco, petrol. Production taxes …
The balance of payments is the record of a country’s transactions / trade with the rest of the world. The balance of payments consists of: Current Account (trade in goods, services + investment incomes + transfers) Capital Account / Financial Account (capital and financial flows, net investment, portfolio investment) Errors and omissions. It is hard …
The competitiveness of British industry refers to whether British goods/service are more attractive to consumers than in other countries. A big factor is the relative price of British goods and services compared to other economies. However, as well as price competition, for many goods non-price competition will be important. For example, British fashion labels may …
Debt is one of the oldest financial instruments, but is it good or bad? To some debt is a sinful way of living beyond your means. Debt is an instrument which increases inequality and can cause economic hardship because of the fixed repayment costs. Furthermore, others point to debt as one of the main causes …