Definition Third World Debt: Third world debt is the external debt that governments in developing countries owe to foreign banks and foreign governments. Many of the countries with third world debt, gained their independence post-1945. Some countries like Indonesia acquired debts from the colonial rulers (Dutch) but for most countries their debt accumulated during the 60s, …
In both the UK and US, politicians are proposing significant, above-inflation increases in the minimum wage. The US is proposing an increase from $7.50 to $15 by 2024. The arguments for raising the minimum wages include – reduced in-work poverty, a reduction in inequality, an incentive to increase labour productivity and higher wages leading to …
Readers Question: What is the role and function of price in the economy? The price of goods plays a crucial role in determining an efficient distribution of resources in a market system. Price acts as a signal for shortages and surpluses which help firms and consumers respond to changing market conditions. If a good is …
Definition of automation Automation refers to the process of automatically producing goods through the use of robots, control systems and other appliances with a minimal direct human operation. Within manufacturing industries, automation has led to increased labour productivity as fewer workers are needed to produce the same number of manufactured goods. A perceived downside of …
Moral Hazard is the concept that individuals have incentives to alter their behaviour when their risk or bad-decision making is borne by others. Examples of moral hazard include: Comprehensive insurance policies decrease the incentive to take care of your possessions Governments promising to bail out loss-making banks can encourage banks to take greater risks. Conditions …
A key economic debate is the extent to which should governments intervene in the economy? At one extreme, free-market economists/libertarians, argue that government intervention should be limited to all but the most basic services, such as the protection of private property and the maintenance of law and order. At the other extreme, Marxist economists argue …
Globalisation involves the increased integration and interdependence of the global economy. It means there will be a rise in trade, and increase in movement of labour and capital. There are both pros and cons of globalisation. The benefits include greater competition, lower prices, economies of scale. Critics argue globalisation can leave many left behind due …
The business or trade cycle relates to the volatility of economic growth, and the different periods the economy goes through (e.g. boom and bust). There are many different factors that cause the economic cycle – such as interest rates, confidence, the credit cycle and the multiplier effect. Some economists also point to supply side explanations, …