Readers Question: Does money printing/QE always lead to inflation and price increases? No. Increasing the money supply does not necessarily cause inflation. In particular, we have seen a large increase in the monetary base (narrow money) that hasn’t led to an increase in the general price level. If you look at link between money supply …
In this post, I looked at the long-term effects of a recession. It examined the various short-term and long-term costs of recession (fall in output) The impacts of a recession can vary depending on the type of recession and also the extent of the existing welfare state. Extent of Welfare state. The impact of a …
Readers Question: When a country faces a recession, can they just increase the import taxes? so the country local production is increased to meet the demand and improve employment as well as the economy? It is an interesting question because often policymakers are tempted to pursue this as a strategy to boost domestic demand in …
Readers Question: Can you Spend Your Way to Full Employment? Full employment implies. An economy without a significant negative output gap. Full employment requires positive economic growth, averaging close to the long run trend rate of economic growth. (in UK long run trend rate = 2.5%) Very low unemployment. Economists would say full employment is …
Readers Question: What are the factors that influence the fixing of a minimum wage? The UK’s first National Minimum wage was established in 1999 and was set at £3.60 for those over 21. It was feared by business that a minimum wage would cause unemployment. However, over the period between 1999 – 2007, in the …
Readers Question: discuss whether economic actions by individuals always results in net benefit to the society “Many other cases, led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for the society that it was not part of it. By pursuing his own …
The Cardboard bike needs no oil. What is the best way to deal with high oil prices? As both a motorist and cyclist, high oil prices are a mixed blessing. It now costs £6o to fill a tank of petrol; I have seen the proportion of my income spent on petrol rise considerably. However, rising …
Evaluate the importance of managing aggregate demand (AD) to bring about a sustained reduction in the rate of unemployment in the UK economy. In 1992 Unemployment in the UK rose to 3 million. A significant part of this unemployment this was due to the recession of 1992. In a recession, demand deficient unemployment will increase. …