In the past few years, we have had a bewildering array of different crisis – credit crunch, financial crisis, fiscal crisis, banking crisis, economic crisis, depression economics, oil price shock, currency crisis, housing crashes and more. Arguably, we should be calling continued mass unemployment a crisis. In many ways, it is more serious than a …
One feature of the past few years is the rapid rise in government borrowing. – not just a rise in real debt but a rise in debt to GDP. This means debt burdens are a bigger % of National Output. It’s not the first time this has happened. A rise in debt to GDP typically …
If you are studying for exams, you will hopefully, be learning that the value of a currency is generally influenced by factors such as: Interest rates – low interest rates lead to hot money flows out of economy and a weaker exchange rate. Relative inflation rates – Higher inflation makes a countries exports uncompetitive and …
This e-book concentrates on macro economics, issues such as economic growth, recessions, the credit crunch, inflation and globalisation. It also takes a look at economic history and also in-depth look at recent economic events such as the European debt crisis, deflation, and levels of government debt.
Updated Sept 2015.
A few people have asked why don’t government’s just default and not pay their debt back? Firstly, a government could effectively default just by printing money, creating inflation and making it easier to pay debt back. But, if the government does create inflation (print money) to pay off its debt or simply refuses to pay, …
Question: Why do we have a VAT rate of 17.5% on many ordinary goods and a tax rate on petrol / tobacco of over 50% – yet when people propose a tax of 0.01% on currency transactions it is denounced as unfair and economically damaging? At the G20 summit, Gordon Brown, proposed a version of …
Readers Question: Is it a good idea for the Baltic states to adopt the Euro before they have met the convergence criteria? Latvia and Lithuania have a target date of 2013 for joining the Euro. Estonia by Jan 1 2011. The four main convergence criteria for the joining the Euro are: Low inflation Low Government …
Many argue that on simple purchasing power parity, the Chinese currency the Renminbi is undervalued by approximately 30%. This is a source of friction in the US, with firms claiming they lose out to a cheap Chinese currency which can undercut US goods. The Chinese government wish to keep the currency undervalued because: A weaker …