In a recent post, we looked at the advantages of free movement of labour. But, what about the problems which might arise from free movement of labour? Firstly, free movement of labour depends on the area in question. To make an easy contrast, initially, the EU was free movement of workers between 12 / 15 …
In economics we often see a delay between an economic action and a consequence. This is known as a time lag. An impact of time lags is that the effect of policy may be more difficult to quantify because it takes a period of time to actually occur. Example of time lags Change in interest …
Definition of free movement of labour – It means that workers are entitled to look for work in another country, without requiring any visa. Free movement of labour is a fundamental principle of the EU. It means EU citizens are entitled to look for a job in another EU country. Also, qualifications are universally accepted …
The credit crunch refers to a sudden shortage of funds for lending, leading to a decline in loans available. A credit crunch can occur for various reasons: Sudden increase in interest rates (e.g. in 1992, UK government increased rates to 15%) Direct money controls by the government (rarely used by Western Governments these days) A …
A budget surplus occurs when government tax receipts are greater than government spending. It means the government can either save money or pay off existing national debt. It is worth noting, that budget surpluses are quite rare in the past 120 years. Politicians have sometimes attempted to enshrine budget surplus into law but what are …
The Brexit vote has led to sharp fall in the value of the Pound, at one stage falling to £1 = $1.22 – a fall of over 15%. This will have a significant impact on British firms, consumers and also those outside Europe. In short: Winners from weak Pound UK exporters who will be more …
Demand management policies are efforts to influence the level of aggregate demand (AD) in an economy. The two main types of demand management policies are: Monetary Policy Fiscal Policy To some extent, the exchange rate could be used to influence aggregate demand, but in practice, it is rarely used as a tool to influence aggregate …
Hysteresis is a concept which states that history affects the value of a current issue. In economics, hysteresis states that historical rates of unemployment are likely to influence the current and future rates of unemployment. If there is a recession and rise in cyclical unemployment, this temporary unemployment can affect the underlying structural rate and …