Readers Question: Economics is a social science, it contains graphs, diagrams and statistics to make strong evaluations and at university level it also often seems to have a strong Maths content which allows for even stronger analysis, calculation of events and evidence of theories. So how is it possible that often economic events such as …
Readers Question: How is it possible for countries with massive debt to have a strong currency, e.g Japan and the US? Sometimes countries can have large debts that are sustainable. In the case of Japan and the US, the general consensus is that there is a very low risk of default. US debt is very …
An Overview of the Indian economy in 2012 and its prospects for the future. (Depressed by events in Europe, a look at an economy with a very different economic outlook). Summary In the past few years, the Indian economy has been growing rapidly – (e.g. 8.5%2010-11). However, this growth has led to an increase in …
Despite the weakness of the UK economy, the Pound is forecast to rise against the Euro, due to the ongoing uncertainty surrounding the debt crisis in the Eurozone. With Greece and other countries at risk of default, and even facing the prospect of a Euro break up, the Pound Sterling looks relatively attractive – despite …
Since 2007, the UK has experienced a variety of economic shocks which have caused a prolonged period of economic stagnation, high unemployment and uncertainty. In 2011, the economic recovery proved much weaker than expected, yet inflation was stubbornly high. In 2012, fundamental weaknesses are likely to keep the UK economy depressed with high unemployment and …
Readers Question Can a fiscal stimulus package reduce the extent of the recession? Fiscal stimulus involves a combination of lower tax cuts and higher spending. In theory the tax cuts will increase disposable income and therefore encourage consumer spending, leading to higher aggregate demand and economic growth. Fiscal stimulus is typically financed by higher government …
Readers Question: Can you please elaborate on “fiscal devaluation” as a suggested solution for Euro area competitiveness problems? Fiscal devaluation is an attempt to restore competitiveness through changes to the tax system. In an exchange rate devaluation, a country allows its currency to fall in value. This makes the countries exports cheaper and more competitive; …
Three questions on quantitative easing, inflation and why inflation in the UK is high despite falling real incomes and lower consumer spending. Readers Question: Isn’t the government (of UK) already printing lots of money? The Bank of England have electronically created money and used this to buy government bonds from financial institutions. The Bank created …