The essential element of Keynesian economics is the idea the macroeconomy can be in disequilibrium (recession) for a considerable time. To help recover from a recession, Keynesian economics advocates higher government spending (financed by government borrowing) to kickstart an economy in a slump. Keynesian economics includes Disequilibrium in macroeconomy (insufficient demand) Imperfect labour markets (e.g. …
An examination of consumer and producer sovereignty. Also, an evaluation of which is stronger – who drives markets – is it, consumers or producers? Definition consumer sovereignty The ability and freedom of consumers to choose from a range of different goods and services. It means that ultimately it is consumers who will decide what is …
Definition of creative destruction This refers to the process of how capitalism leads to a constantly changing structure of the economy. Old industries and firms, which are no longer profitable, close down enabling the resources (capital and labour) to move into more productive processes. Creative destruction means that the company closures and job losses are good …
The resource curse is the observation that countries endowed with a rich source of natural resources can struggle to make effective use of these and often end up with low levels of economic development than countries with low levels of natural resources. There are various reasons put forward to explain this resource curse, such as …
A progressive tax takes a higher percentage of tax from people with higher incomes. It means that the more a person earns, the higher his average rate of tax will be. In this case, the person earning £10,000 is paying 20% of their income in tax (total tax of £2,000) The person earning £20,000 is …
Between 2009-16 the Portugal economic experienced a severe economic crisis – characterised by falling GDP, high unemployment, rising government debt and high bond yields. This was caused by a combination of the global recession, lack of competitiveness and limitations of being in the Euro. What caused the Portuguese economic crisis? In the period Q4 2o10 …
Readers Question: I’m currently reading ‘Crisis Economics’ (by N.Roubini) at the moment and I don’t get some stuff in the book. When it was talking about the current account balance, the book referred to it as a balance between national savings and national investment, but I don’t quite understand this. The Current account on the …
Definition of deindustrialization Deindustrialisation involves a decrease in the relative size and importance of the industrial sector in an economy. It may involve a decrease in the absolute size of industry or it might just mean that manufacturing/industry takes a smaller share of GDP and employs a smaller % of the workforce. Deindustrialisation will invariably …