Recently, the Euro has fallen from 1.5 Dollars to 1 Euro in 2011 to near parity in March 2015. The fall in the value of the Euro has been very steep in the last six months. This is a very significant depreciation in the Euro, and primarily reflects the greater economic weakness in the Eurozone. …
A look at why the Venezuela economy is dependent on oil, why it did not do more to diversify, and the problems of relying on a primary product like oil. Readers Question: First, why are more than 90% of their exports based on oil? Under Hofstede’s “Uncertainty and Avoidance of Risk”, Venezuela is ranked as …
In the UK, there are quite a few different measures of inflation. All measures seek to show the annual change in living costs. However, different measures of inflation give different inflation figures. For example, RPI can often give a higher rate of inflation than CPI. CPI can also be misleading. For example, an increase in VAT …
Readers question: explain benefits of increasing rate of unemployment benefit – for the unemployed , society and any cost that may result from such policy. Current Weekly Rates of Job Seekers Allowance in UK Contribution-based JSA Age JSA weekly amount 18 to 24 up to £57.90 25 or over up to £73.10 Contribution based …
Readers question: what are perfectly flexible wage? Perfectly flexible wages are job contracts where the wage can frequently be changed. For example, if wages are determined by the income firms get – then wages are flexible – they directly change depending on price of goods. This means the wage a farm worker gets will vary …
Readers Question: Is there an inbuilt deflationary bias in the Eurozone? Note: I originally wrote this post in 2010. Unfortunately, every year there is a reason to update the post and suggest the deflationary bias in the Eurozone keeps getting stronger. Deflationary bias means that there is a tendency for economic policy to promote lower …
Why didn’t the UK Join the Euro? Joining the Euro would give the UK various advantages: predictability of exchange rates with Europe Easier for consumers to compare prices (price transparency) Lower transaction costs Encourages investment because of greater stability in trade. However, despite these potential benefits the UK decided not to join and shows no …
Bank of England base interest rates are currently 0.5%. Economists are divided about when interest rates will rise. Some point to the evidence of a strong economic recovery to suggest interest rates could rise by mid 2015. Others argue that the strong global deflationary pressures mean that UK inflation is likely to stay very low …