Definition of investment: Investment is the addition to Capital Stock of the economy – e.g. factories, machines, or any item that is used to produce other goods and services Note saving money in a bank is not investment in economic terminology The value of capital stock depreciates over time as it wears out and is …
Definition: Aid involves economic assistance from one country to another. Usually, aid refers to assistance from the developed world to LDCs – less developed countries Aid can take various forms: Debt Relief – Forgiving debt can save LDCs annual interest payments and leave them more resources for internal investment Direct AID- giving food, money and …
Definition of beggar my neighbour policy: This is an economic policy that seeks to promote a country’s economy at the expense of another country. It assumes that economics is a zero-sum game. In other words, if you want more income, you have to take it from other countries. It should be noted that most economists …
Economists attempt to make forecasts for leading economic variables such as Inflation Economic growth House prices Exchange rates Population growth The main importance of economic forecasts is to help policymakers make better decisions. For example, if the economy was forecast to enter into a recession, the government could consider implementing expansionary fiscal policy (higher spending …
Readers Question: If there is a significant slowdown in the rate of Chinese economic growth – how will it affect the UK and other global economies? Summary The Chinese economy has been growing very rapidly, and is now one of the biggest economies in the world. The size of the Chinese economy means it has …
Readers Question: what are the possible consequences/effects of protectionism with regard to the UK and the rest of the world? Protectionism occurs when countries place restrictions on imports into the economy. This can involve higher tariffs (a type of tax on imports) or quotas and embargoes. Other forms of protectionism can be less obvious, such …
A chain-weighted inflation measure takes into account changes in both price and spending patterns. A chain-weighted inflation index measures both changes in the price of goods but also reflects changes in the number of goods bought. For example, suppose you buy two goods which are close substitutes – bananas (30p) and apples (30p) At this …
Readers Question: Is the following concept correct or not – Nobody wants a free good? Firstly, a free good is a good with zero opportunity cost. Water is usually a free good in the UK. Examples of a free good include: Water (where supply is abundant) Air (where supply is abundant) Blackberries growing in the …