1) You say depreciation causes inflation for the three reasons you mention, but later, that in the long run, a higher rate of inflation will cause depreciation. So my first question is how are these two phenomena linked? Is ‘long run’ the key; i.e. it takes a prolonged high inflation to cause a devaluation, but …
Readers Question. EVALUATE THE LIKELY ECONOMIC EFFECTS OF A FALL IN THE UK’S COMPETITIVENESS. I know some points, such as deficit on current account, slower economics growth etc. However, I don’t know how to evaluate and write a conclusion on this one. Can you please help me? This is definitely the more difficult part of …
I asked my Economics students to conduct a questionnaire, asking people in the street various questions about Economics. One Question was: What do You consider to be the Most Serious economic problem Facing the UK at the moment. These are the most popular responses to far. House Prices (50% of responses) Government Debt Ignorance because …
Back in March I wrote this essay – Is the US heading towards recession? According to some doom mongers the US is already in recession. They point to the ‘collapsing’ housing market and the rise in ‘repossessions’ The irony is that US economic growth has remained unexpectedly high at 4.9% in 3rd quarter of 2007. …
Readers Question: What counts as an import on the Balance of Payments? Current Account measures trade in: Goods, Services, Investment incomes Net Transfers A Debit on the credit account occurs when the UK imports goods and therefore money flows from the UK to oversees to purchase it. If debits are greater than credits the UK …
Readers Question: What will happen if OPEC continued to increase oil prices? Firstly, the rise in the price of oil is not just due to the activities of OPEC. It is partly due to the rising demand from countries such as China. If OPEC continue to contribute to higher oil prices in 2008 it would …
In many ways the economy is in a good position. The main economic indicators suggest a strong and sustainable economy, which offer good prospects for 2008. Economic growth, at 2.6% is close to the long run trend rate. Unemployment, according to JSA measure, is under 1 million. At 3% of the labour force this is …
See also: Chinese Economy 2008 For many years the Chinese Yuan was tied to the dollar, however in July 2005 the yuan was finally allowed to break away from the dollar. However, unlike most other currencies, the Chinese government still try to influence the level of the Yuan. They have tried to keep the …