Question number 3 from What would Keynes do? – If I enjoy drinking beer. How much should I drink? Key quote “My only regret in life is that I did not drink more champagne.” John Maynard Keynes. If something is good to do – does it mean it is good to do it to excess? This …
A look at the benefits and costs of capital flows.
Readers Question: The Oil Petroleum and Exporting Countries (OPEC) comprise the main oil procedures in the world. With the aid of diagrams show how OPEC is able to fix the price of oil on the world markets and comment on its recent activity in this area. Suggest what would happen if OPEC kept increasing prices …
What would be the impact of the US placing a tariff on the import of steel and aluminium into the US A tariff on imports of foreign steel would raise the price of imported steel and encourage US firms and consumers to buy domestically produced steel instead. At the moment, American producers find it cheaper …
A Customs Union occurs when a group of countries agree to have free trade amongst themselves and agree on a common external tariff to countries outside the zone. It is a step towards a single market, but a customs union doesn’t include freedom of movement for people and goods. A customs union is often examined …
Trade unions provide an organisation for workers to have joint representation with their employers. Trade unions have several functions: Represent workers with regard to pay and working conditions. Bargain for higher wages with the possibility of going on strike to target higher wages. Co-ordinate with firms to implement new working practises and negotiations with workers …
The hypothesis of financial instability was developed by the economist Hyman Minksy. He argued that financial crisis are endemic in capitalism because periods of economic prosperity encouraged borrowers and lender to be progressively reckless. This excess optimism creates financial bubbles and the later busts. Therefore, capitalism is prone to move from periods of financial stability …
Boom and bust economic cycles involve: Rapid economic growth and inflation (a boom), followed by: A period of economic contraction / recession (falling GDP, rising unemployment) Causes of boom and bust cycles 1. Loose Monetary Policy If monetary policy is too loose, it means real interest rates are too low given the state of the …