People demand money for different reasons. The asset motive states that people demand money as a way to hold wealth. In a period of inflation,the value of money declines and therefore there is unlikely to be an asset motive for money. However, in a period of deflation, money increases in value and therefore there may …
Readers Question: What do people mean by countries/society/financial implosion? Financial implosion implies a serious financial crisis where a country experiences a severe economic and financial crisis. The concept of implosion suggests that a crisis in one part of the economy would have a knock on effects to other parts as well – leading to a …
The past few years have seen a rapid rise in real food prices – especially, fruit, vegetables and meat. At the same time, we have seen falling real incomes for low-income decile groups. The consequence is that those on low incomes have been changing their diet in response to higher prices. With squeezed real incomes, …
A look at the contradiction between health care spending and actual treatment. The US which spends more on private sector health care spending, still also has one of the highest levels of government spending on health care per capita. Furthermore, health care costs continue to rise, and place one of the greatest strains on government …
In 2009, US and EU unemployment rates both stood at 10% – but since then EU unemployment has increased to 12% and US unemployment fallen to 7.9%. (see: US v EU unemployment) These contrasting fortunes in unemployment are a reflection of diverging rates of economic growth. Whilst, Europe has entered a double dip recession, the …
Readers Question: why does economic growth not get noticed by the man on the street? Recently, the ONS released a report saying that real wages were 62% higher than in 1986. This is the result of sustained economic growth. (Real wages take into account inflation.) In April 2011 the average full-time employee in the UK …
Readers Question. Can you explain why the Government and Economic Commentators are talking about a multiplier (in relation to budget cuts) of between 0.5 and 1, whereas I always thought that the GDP multiplier was bigger than this. Just to summarise a multiplier of 0.5 would mean fiscal consolidation (spending cuts) of £1bn, would lead …
Why have countries in the Eurozone faced greater difficulties in promoting economic recovery? How does a country with its own currency find greater flexibility in overcoming a recession? 1. Impact of Currency and Bond Yields A striking feature of recent years is that countries in the Eurozone have been significantly more susceptible to rising bond …