Readers Question: How can a larger government fiscal deficit case a larger international trade deficit Firstly, it is important not to confuse the two deficits. Government fiscal deficit occurs when government spending is greater than tax revenues. The deficit is the annual government borrowing requirement, measured by Public Sector Net Borrowing. International Trade deficit implies …
Readers Question: I keep reading about our country’s trade deficit which was £3bn in April. How does that work, if a country is spending more than it’s earning? Are we getting ourselves into more debt? I read that Germany has a trade surplus, which is not surprising but why can’t we do the same? There …
“Maintaining and expanding a nation’s stock of capital requires saving.” Evaluate and explain. Is the assumption of full employment of any relevance? Capital Stock is the level of productive capacity in the economy. Saving and Investment There is an important economic idea that Savings = Investment. The logic is that without bank deposits, banks are …
Readers Question: discuss whether economic actions by individuals always results in net benefit to the society “Many other cases, led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for the society that it was not part of it. By pursuing his own …
Readers Question: Why do the Government often fail to achieve its main objectives of high economic growth, price stability, and a surplus on the balance of payments. Other objectives worth adding are low unemployment, low government borrowing and maybe stable exchange rate. Looking at the current climate of the UK economy, the government is only …
Readers Question: Actually, I would like to know if the current UK’s recession is caused whether economic policies which have been practised or the UK has been affected from outside the country? The recession is caused by a mixture of domestic and international factors. For more detailed explanation see: Economic crisis explained Who is to …
The Spanish economy is facing many difficult challenges. Housing Boom and Bust. Despite a relatively prudent banking sector, Spain experienced a real boom in the housing market. This was partly caused by foreign demand for holiday homes. House prices rose and there was also a boom in construction. Construction accounted for a large part of …
Readers Comment It is shocking to me that revenues from all my future income tax and even my young children’s future tax payments have already been committed by our national debt. If it is not some kind of nefarious carve-up, why would the UK wage 2 unnecessary wars costing billions when we do not have …