A currency carry trade occurs when people borrow in one currency and invest in another country. For example, suppose Japanese interest rates are 0% and US interest rates are 5%. In this case, an investor can buy Yen and borrow from a Japanese bank at 0% interest. He can then exchange Yen for Dollars and …
The Common Agricultural Policy (CAP) is a European policy which involved: Setting minimum prices for many agricultural products Setting import tariffs to protect from cheap imports EU purchases of surplus food to maintain minimum prices Since 2005, farmers have been subsidised through Single Farm payments (SFP) and rural development funds The impact of minimum prices …
Definition of deindustrialization Deindustrialisation involves a decrease in the relative size and importance of the industrial sector in an economy. It may involve a decrease in the absolute size of industry or it might just mean that manufacturing/industry takes a smaller share of GDP and employs a smaller % of the workforce. Deindustrialisation will invariably …
Definition of adjustment costs This is the cost to a firm of altering its level of output. For example, it may be desirable for a firm to cut down on its output, but doing this will create adjustment costs such as redundancy payments and lower staff morale. On reflection of its adjustment costs, it may …
Definition Real GDP per Capita measures the average level of national income (adjusted for inflation) per person. It gives a rough indication of average living standards. GDP, (Gross Domestic Product) measures the national output/national income of an economy; this is a measure of the volume of goods and services produced in a given year. Real …
From an economic perspective, the EU can be criticised for various reasons including Common agricultural policy (CAP) Regulated labour markets – higher structural rates of unemployment Deflationary bias of ECB Problems of Euro Problems of free movement of labour Common Agricultural Policy CAP The CAP was one of the most inefficient economic policies and a …
Wages are said to be flexible when they respond to changes in supply and demand and lead to the market clearing wage being set. It implies that the wage will be set by the Marginal Revenue Product of labour and marginal cost of labour. Any change in supply and demand for labour will lead to …
Definition of composite demand Demand for a good that has multiple different uses. e.g. People may demand oil because it can be used to create either petrol or plastics. Examples of composite demand People may demand wheat for producing bread, biofuels or feeding livestock. Land can be used for farming or building houses. Steel could …