Readers Question: Will an extra $20 billion per year spent on housing have the same impact on the economy as an extra $20 billion spent on interstate highways? It depends on the state of the economy. At the moment, 2008, one of the biggest threats to the US economy is falling house prices. Data released …
Readers Question: Use the ideas and theories you have encountered in your study of the macroeconomic business environment to assess the possible impacts on China of holding the Olympic games in Beijing in 2008. The Olympic Games will effect the Chinese economy in the following way. Increase in Tourism. This is a short term effect …
1) You say depreciation causes inflation for the three reasons you mention, but later, that in the long run, a higher rate of inflation will cause depreciation. So my first question is how are these two phenomena linked? Is ‘long run’ the key; i.e. it takes a prolonged high inflation to cause a devaluation, but …
Readers Question: If long term Interest rates in the US do not fall, how will this impact the US economy? Short Term Interest rates are governed by the Fed’s Current monetary Policy. These have fallen sharply in recent months from 4.25% to 2.25%. This reflects the Feds desire to avoid an economic downturn. The sharp …
How do we avoid environmental damage in an expanding economy? It is not easy because a lot of environmental damage occurs as a result of negative externalities. In other words, the environmental damage from producing a good, driving a car primarily affects other people. Therefore, free markets are not efficient at dealing with environmental externalities. …
On March 12th, Alistair Darling will deliver his first budget. With the economy slowing down, he is not left with much room for manoeuvre. Tax Revenues are less than the government hoped and the National debt is likely to soon exceed the government’s self imposed ceiling of 40% of GDP. In 2008-09 Mr Darling will …
The government has announced that the National Minimum wage will rise to £5.73 for workers over 21 – by the end of 2008. This means for a worker on a 40 hour week, their take home pay will be £229 per week. This also attracts top up benefits from the government in the form of …
Readers Comment: I’m a pensioner. Since introduction my Council Tax has increased by 103%,my pension by 29%. Mine is the sole income,why should I pay the same as a family of 4 all working and living in a house in the same tax band;does only one of them receive help from the police, firebrigade, does …