A crucial issue at the moment is the state of the Chinese currency. Many feel that the Chinese government are manipulating the Currency to keep it undervalued. To keep the Renminbi undervalued the Chinese are selling their currency and buying dollar assets. The weaker Renminbi is good for Chinese exporters. It makes Chinese exports more …
Readers Question: how will central bank may increase the supply of money in economy? The money supply is the total amount of money available in the economy at a particular point in time. A narrow definition of money involves notes and coins. A broader definition includes cash plus bank and building society deposits. Policies to …
To many people’s surprise, UK house prices have risen quite strongly in the past 12 months. If we look at the experience of Japan, United States, Ireland or Spain, it seems the experience of Britain is unusual. Countries like Japan and the US had a boom and bust in house prices, similar to the UK. …
A few people have asked why don’t government’s just default and not pay their debt back? Firstly, a government could effectively default just by printing money, creating inflation and making it easier to pay debt back. But, if the government does create inflation (print money) to pay off its debt or simply refuses to pay, …
Whilst the UK is slowly struggling out of recession – spare a thought for Greece, who are experiencing a real economic crisis – partly of their own making – and exacerbated by the straitjacket that EURO membership entails. The Greek economy has several significant problems Current account deficit of 14% of GDP – their exports …
2010 will be a difficult year for the UK economy. After the deepest recession since the 1930s, the outlook is for a sluggish recovery. Though recovery is welcome, it still leaves the problem of spare capacity, high unemployment and record levels of peacetime government borrowing. It will be a difficult tightrope between boosting economic growth …
This graph illustrates the difference between actual GDP and potential GDP. It also indicates how much Real GDP growth has lagged behind potential growth. This means the US economy currently has substantial spare capacity. This is reflected by a rise in unemployment and factories operating below full capacity. The Real potential GDP illustrates the long …
Readers Question: I trying to find appropriate policies that the Icelandic government could adopt to deal with the country`s substantial current account deficit. Do you know what policies they are using for the moment, and more importantly which policies they should adopt? Related Problems with Iceland Economy Solving UK Current account deficit At the height …