Despite weak economic growth of the past decade, UK unemployment has fallen quicker than we might expect. It appears the natural rate of unemployment has fallen and despite record employment levels, wage pressures remain muted. Different reasons for this fall in unemployment include – low productivity, more flexible labour markets, disguised unemployment (underemployment) and growth …
Since the credit crisis of 2008, the UK economy has experienced structural weakness of Low economic growth Very poor productivity growth Weak demand Unbalanced economy geared towards consumption and low levels of investment. In addition to these structural weaknesses, the UK economy in 2020 now faces real threats from A hard Brexit Risk of slowdown …
Definition – Sticky wages is a concept to describe how in the real world, wages may be slow to change and get stuck above the equilibrium because workers resist nominal wage cuts. Wages can be ‘sticky’ for numerous reasons including – the role of trade unions, employment contracts, reluctance to accept nominal wage cuts and …
The great recession refers to the economic downturn between 2008 and 2013. The recession began after the 2007/08 global credit crunch and led to a prolonged period of low/negative growth, rising unemployment and a period of fiscal austerity. In particular, the great recession highlighted problems within the Eurozone which experienced a double-dip recession and high …
Definition of Market Failure – This occurs when there is an inefficient allocation of resources in a free market. Market failure can occur due to a variety of reasons, such as monopoly (higher prices and less output), negative externalities (over-consumed and costs to third party) and public goods (usually not provided in a free market) …
Supply refers to the quantity of a good that the producer plans to sell in the market. Supply will be determined by factors such as price, the number of suppliers, the state of technology, government subsidies, weather conditions and the availability of workers to produce the good. Movement along the supply curve As price increases …
Definition of fiscal policy Fiscal policy involves the government changing the levels of taxation and government spending in order to influence aggregate demand (AD) and the level of economic activity. AD is the total level of planned expenditure in an economy (AD = C+ I + G + X – M) The purpose of Fiscal …
Main topics in macroeconomics Balance of payments Policies to reduce current account deficit Budget deficit Policies to reduce budget deficit Economic growth Causes of Boom and Bust Cycles Policies to increase economic growth Theories of economic growth Recessions Environmental economics Fiscal policy Globalisation Exchange rates Effect of an appreciation Effect of devaluation European Union The …