Currency substitution occurs when a country uses another currency without any official backing and without a Central Bank – instead of using its own currency. For example, Panama uses the US Dollar as its currency. Even though it has no formal currency union with the UK. Jersey uses Sterling unofficially too. The advantage is that …
If Scotland gains independence, the Yes campaign has argued that their preferred option is to keep the Pound Sterling and enter into a currency union with the rest of the UK. This means sharing the same currency Pound Sterling, and having the same monetary policy. Monetary policy would continue to be set by the Bank …
Readers Question: Given the current environment, is it a valid argument of companies that increasing workers salaries will cause a loss of competitiveness? For example, cutting entry-level and middle-level workers salary while increasing management salaries will not change the profit levels of a company much. Wages are a part of a firm’s costs. If wages …
A trade deficit implies the value of imports of goods is greater than exports. (M>X) The trade deficit is an important component of the current account on the balance of payments. Sometimes people use a trade deficit and a current account interchangeably, but in the UK this is not correct. The current account also includes …
Readers Question: How do bond spreads affect the value of the Dollar or Euro? A bond yield refers to the interest payment that you receive from holding the bond yield. If the yield is 4%, you can expect £4 a year from a £100 bond. A bond spread refers to the differences in bond yields. …
Readers Question: I have to visit the college I went to and give 5-10 min talk to A2 Economics students about anything economics related, preferably macro-economics.. something going on in the economy. Suggestions? Giving a presentation on economics can be a daunting thing. I often ask students (at this time of the year) to come …
Readers Question: What policy strategy is good to reduce unemployment in Greece? The Greek economy is experiencing grave problems, with record levels of unemployment. Unemployment in Greece is running at 27.5% – (end of 2013) This unemployment rate is even higher amongst young people. The unemployment is primarily caused by the prolonged recession which has …
Readers Question: how we can reduce the unemployment (with implication ) in short run and long run and try to give some lively examples except of uk The unemployment rate in the UK is currently quite low about 4.5%. Therefore, it is difficult for the government to significantly reduce this. A lot of the unemployment …