Definition of Competition Policy: Government policies to prevent and reduce the abuse of monopoly power. Abuse of monopoly power can lead to market failure and be against the public interest. Therefore Governments are concerned to intervene and protect the interests of the consumers. 1998 Competition Act sought to bring the UK into line with EU …
In the real world, labour markets are rarely perfectly competitive. This is because workers or firms usually have the power to set and influence wages and therefore wages may be set to levels different than anticipated by Marginal Revenue Product (MRP) theory. Imperfections in the labour market cause wages to differ from a competitive equilibrium. …
The Natural rate of unemployment is mainly composed of frictional and structural unemployment. Therefore, factors that affect these types of unemployment will alter the natural rate. It is argued the level of unemployed benefits can affect frictional unemployment. If the ratio of benefits to paid employment is high, then there is little incentive to take …
Although controversial, what are the potential advantages of privatising public services? Firstly, privatising means outsourcing of public services to the private sector. For example, this might include Competitive tendering – where private companies are allowed to bid for the right to provide meals for hospitals. NHS outsourcing treatment to private hospitals. To deal with waiting …
The UK recession of 1991 was primarily caused by high-interest rates, falling house prices and an overvalued exchange rate. Membership of the Exchange Rate Mechanism (1990-1992) was a key factor in keeping interest rates higher than desirable. The recession also came after the late 1980s economic boom – a period of high economic growth and …
The natural rate of unemployment occurs when the labour market is in equilibrium; it is mainly composed of frictional and structural unemployment. The natural rate of unemployment is affected by supply-side factors such as geographical/occupational immobilities and labour market imperfections. Firstly, it is argued the level of unemployment benefits can affect the level of frictional …
A currency carry trade occurs when people borrow in one currency and invest in another country. For example, suppose Japanese interest rates are 0% and US interest rates are 5%. In this case, an investor can buy Yen and borrow from a Japanese bank at 0% interest. He can then exchange Yen for Dollars and …
Definition of deindustrialization Deindustrialisation involves a decrease in the relative size and importance of the industrial sector in an economy. It may involve a decrease in the absolute size of industry or it might just mean that manufacturing/industry takes a smaller share of GDP and employs a smaller % of the workforce. Deindustrialisation will invariably …