The great recession refers to the economic downturn between 2008 and 2013. The recession began after the 2007/08 global credit crunch and led to a prolonged period of low/negative growth, rising unemployment and a period of fiscal austerity. In particular, the great recession highlighted problems within the Eurozone which experienced a double-dip recession and high …
Readers Question If one looked at the UK’s Historical Debt to GDP ratio; at the time austerity was introduced; the Debt to GDP ratio was last at this 2010 level in 1966. Having lived in 1966 there was no massive economc requirement to reduce public spending at that time ie everything was fine. So was …
Readers Question: At the time of the Economic collapse 2007/ 2008 or near the end of that period in 2010 the Labour administration had actually started to pull out of recession – True or False? The recovery began towards the end of 2009 (Q4). Q2 growth in 2010 was quite high at 1% (annualised 4%) …
Definition: Price elasticity of demand (PED) measures the responsiveness of demand after a change in price. Example of PED If price increases by 10% and demand for CDs fell by 20% Then PED = -20/10 = -2.0 If the price of petrol increased from 130p to 140p and demand fell from 10,000 units to 9,900 …
Definition of Market Failure – This occurs when there is an inefficient allocation of resources in a free market. Market failure can occur due to a variety of reasons, such as monopoly (higher prices and less output), negative externalities (over-consumed and costs to third party) and public goods (usually not provided in a free market) …
Supply refers to the quantity of a good that the producer plans to sell in the market. Supply will be determined by factors such as price, the number of suppliers, the state of technology, government subsidies, weather conditions and the availability of workers to produce the good. Movement along the supply curve As price increases …
Definition of Monopsony A monopsony occurs when a firm has market power in employing factors of production (e.g. labour). A monopsony means there is one buyer and many sellers. It often refers to a monopsony employer – who has market power in hiring workers. This is a similar concept to monopoly where there is one …
An explanation of how wages are determined in a perfectly competitive labour market. A perfectly competitive labour market will have the following features Many firms Perfect information about wages and job conditions. Firms are offering identical jobs Many workers with the same skills Diagram of wage determination The equilibrium wage rate in the industry is …