Readers Question: I’d like to ask you about routine ways (apart from so called “printing new money”) by which the total volume of money in the economy grows. The money supply measures the stock of money in the economy. A narrow definition of money (M0) includes the stock of notes/coins and operational deposits at Bank …
Definition of Participation Rate. The participation rate is the number of people working or actively seeking work as a % of the working population (16-65). The participation rate is similar to the concept of being ‘economically active’. If a person drops out of the labour market, they are considered economically inactive and no longer participating. …
The wage-price spiral refers to the strong mutual link and between wage growth and inflation. Rising wages invariably put upward pressure on prices and inflation. High inflation creates upward pressure on wages as workers seek to gain an increase in wages to meet the rising prices and maintain living standards. Thus a wage-price spiral can …
Prices and incomes policy is an attempt by the government to set the rate of increase in prices and the rate of wage increases in the economy. The government do not seek to control individual prices but control the general rate of increase in prices and incomes. Price and incomes policy may involve ‘voluntary’ agreements …
Definition: The fiscal stance of a government refers to how its level of spending and taxation impact on aggregate demand and economic growth. Higher taxes and a budget surplus is seen as fiscal consolidation or deflationary stance. A budget deficit has an expansionary impact. A fiscal stance can be expansionary, neutral or deflationary. Expansionary stance: …
There are a few different reasons firms may put up prices, but in each case, a business will weigh up the pros and cons. Potential reasons for increasing prices An increase in costs of production. A general increase in the price level (inflation) Competitors are increasing the price. Firms believe demand has become more price …
Readers Question: I only have $10,000 in my bank. With this virus situation, what is going to happen to the value of my money? Serious question. Do I try to exchange my money to another foreign country currency? Help, please. I am 68 years old, no pension and no job. George Firstly, I would not …
A recession (fall in national income) will typically be characterised by high unemployment, falling average incomes, increased inequality and higher government borrowing. The impact of a recession depends on how long it lasts and the depth of the fall in output. The main costs of a recession will be: Unemployment Fall in income – shorter …