The Balance of Payments is a record of a country’s transactions with the rest of the world. It shows the receipts from trade. It consists of the current and financial account. UK current account 1955-2018 1. Current account This is a record of all payments for trade in goods and services plus income flow it …
The Dutch disease refers to the problems associated with a rapid increase in the production of raw materials (like oil and gas) causing a decline in other sectors of the economy. When the raw materials run out, the economy can be in a worse position than before. – Can the discovery of substantial raw materials …
An overvalued exchange rate implies that a countries currency is too high for the state of the economy. An overvalued exchange rate means that the countries exports will be relatively expensive and imports cheaper. An overvalued exchange rate tends to depress domestic demand and encourage spending on imports. An overvalued exchange rate can also be …
There are many costs associated with inflation; the volatility and uncertainty can lead to lower levels of investment and lower economic growth. For individuals, inflation can lead to a fall in the value of their savings and redistribute income in society from savers to lenders and those with assets. At extreme levels, inflation can destabilise …
Production-based CO2 emissions is the amount of CO2 emitted in a particular country. Consumption-based CO2 emissions are adjusted for trade and reflect CO2 emissions related to goods and services consumed in a particular country. Explanation of production vs Consumption-based CO2 emissions Suppose the UK used to produce its own steel, the production process would cause …
Readers Question: Does inflation causes unemployment? There are a few different scenarios where inflation can cause unemployment. However, there is not a direct link. Often we will notice a trade-off between inflation and unemployment – e.g. in a period of strong economic growth and falling unemployment; we see a rise in inflation – see Phillips …
Definition of Foreign Direct Investment (FDI). FDI is the net transfer of funds to purchase and acquire physical capital, such as factories and machines, e.g. Nissan, a Japanese firm, building a car factory in the UK. In recent years, foreign direct investment has also widened to include the purchase of assets and shares which give …
A look at the relationship between economic growth and exports. Readers Question: How would an increase of economic growth lead to an increase in exports? Also, does the increase only happen just in a fixed period of time, or increase in one period is likely to affect the future? Economic growth doesn’t necessarily lead to …