Both socialism and communism place great value on creating a more equal society and removal of class privilege. The main difference is that socialism is compatible with democracy and liberty, whereas Communism involves creating an ‘equal society’ through an authoritarian state, which denies basic liberties. Democratic socialism in the west involves participating in democracy to …
Oil prices tend to be volatile for a few reasons. Demand varies with the economic cycle. Changes in the price of oil can be magnified by speculators who buy forward contracts Supply is quite inelastic in the short-term. Therefore, a small change in demand can have a significant impact on the price. Firms and consumers …
A fall in oil prices should cause a reduction in transport and fuel costs for firms. Consumers who will also benefit from the lower prices of transport and fuel. The lower oil prices will effectively increase their disposable income and enable them to spend more on other goods Because oil is the most traded commodity …
Readers Question: What is the difference between monetary and fiscal policy? Monetary policy involves changing the interest rate and influencing the money supply. Fiscal policy involves the government changing tax rates and levels of government spending to influence aggregate demand in the economy. They are both used to pursue policies of higher economic growth or …
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 …
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 …
Definition of a liquidity trap: When monetary policy becomes ineffective because, despite zero/very low-interest rates, people want to hold cash rather than spend or buy illiquid assets. A liquidity trap is characterised by Very low-interest rates Low inflation Slow/negative economic growth Preference for saving rather than spending and investment Monetary policy becomes ineffective in boosting …
Supply and demand are a fundamental basis of economics; they help explain the determination of price and output in different markets. The supply curve shows the amount of goods firms are willing to sell at different prices. At higher prices, it becomes more profitable to sell the goods, so supply tends to rise with the …