Panic buying – is it rational or irrational Panic buying is a situation where consumers buy an unusually large quantity of a good in anticipation of coming uncertainty. A related concept is ‘surge buying’ where people buy more than usual for rational reasons. Reasons for panic buying could include Health crisis which causes people to …
In the past two decades, we have had a remarkable period of low inflation. Inflation has been so low, some economists have suggested a new paradigm – the end of inflation as a primary economic concern. Since 2009, any predictions of imminent inflation have proved to be wide of the mark. There have been warnings …
Slowbalisation – a phenomena which involves a slowing down of the pace of global integration. In recent decades globalisation has become so dominant, that we often assume the process is never-ending. Between 1970 and 2008, world exports as a share of GDP rose from 13% to 31%, and it seemed that globalisation was an unstoppable …
Definition of oligopoly An oligopoly is an industry dominated by a few large firms. For example, an industry with a five-firm concentration ratio of greater than 50% is considered an oligopoly. Examples of oligopolies Car industry – economies of scale have caused mergers so big multinationals dominate the market. The biggest car firms include Toyota, …
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 …
‘Beggar my neighbour’ is a term used to describe an economic policy, where you seek to gain an economic advantage by making other countries lose out. Cutting corporation tax is an effort to take away investment from countries with higher corporation tax. It creates an incentive for countries to keep cutting to see who has …
A look at how interest rates and inflation affect the exchange rate – in short, higher interest rates tend to cause an appreciation in the exchange rate. Readers Question: In currency investing, would it be more profitable to invest in a country with high-interest rates and high inflation, or low to zero interest rates with …
Definition – Cyclical Unemployment is unemployment due to a period of negative economic growth, or economic slowdown. In a recession, cyclical unemployment will tend to rise sharply. Peaks in unemployment correspond with swings in the economic cycle. Recessions of 1981,1991/92 and 2008/09 Why unemployment rises in a recession If there are fewer orders for goods, …