How to know when you’re in a recession?

A recession is defined as a decline in real GDP for two consecutive quarters. An economy is in an official recession after six months of falling national income. A recession will typically lead to higher unemployment, a decline in confidence, falling house prices, decline in investment and lower inflation. However, although that may seem quite …

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Rational expectations

rational-expectations

Definition of Rational expectations – an economic theory that states – when making decisions, individual agents will base their decisions on the best information available and learn from past trends. Rational expectations are the best guess for the future. Rational expectations suggest that although people may be wrong some of the time, on average they …

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Time Lags

In economics we often see a delay between an economic action and a consequence. This is known as a time lag. An impact of time lags is that the effect of policy may be more difficult to quantify because it takes a period of time to actually occur. Example of time lags Change in interest …

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Interest Rates and Balance of Payments

current-account-from-1987

Readers Question: Interest Rates are increased by the governments to bring down inflation rates, this makes exports price competitive as well, as a result, exports increase. However, an increase in interest rates can lead to an appreciation of the currency as demand for the currency increases. So this again increases the price of exports as …

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House prices and interest rates

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Interest rates have a strong influence on house prices, principally because changes in the interest rate affect the cost of mortgage payments. How do interest rates affect house prices? If interest rates rise it will have a significant effect on increasing the cost of mortgages. Higher mortgage payments will deter prospective home-buyers – it becomes …

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Types and causes of financial bubbles

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Readers Question: In finance and economics, there are such things as “bubbles” in the economy. And when bubbles start forming, it normally isn’t a good thing. My question is, how many different kinds of “bubbles” are there? Such as the property bubble or stock market bubble. And how do they form and what are their …

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Model economics data response

This revision guide offers a selection of data response questions and model answers.

It is designed to help for:

  • Edexcel Unit 4 – The Global Economy
  • AQA Unit 4 – National and International Economics
  • OCR  – The Global Economy

If you want to distribute unlimited copies in your school, you can buy a Network license – £45.00

(e-book) sent within a couple of hours after purchase.

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