Readers Question: Using data and your economic knowledge assess the case for and against a government completely banning the sale and consumption of cigarettes. AQA (15) 1. Cigarettes are a demerit good. People underestimate the costs of smoking, e.g. lower life expectancy. It has been suggested that the true cost of a packet of cigarettes …
Readers Question: I keep reading about our country’s trade deficit which was £3bn in April. How does that work, if a country is spending more than it’s earning? Are we getting ourselves into more debt? I read that Germany has a trade surplus, which is not surprising but why can’t we do the same? There …
Discuss Economic Policies to Improve the Health of the Nation Can we use economics to improve the nation’s health? For many years rising living standards led to improved health and life expectancy. Greater national income enabled more to be spent on health care. Combined with improved medical technology, life expectancy rose. However, in many western …
Most western economies are facing the prospect of record peace time government debt levels. The EU Maastrict Criteria stated that the maximum budget deficit member countries could run is a budget deficit of 3% of GDP. (By the way, I am glad this target for government borrowing has not been enforced. That would have been …
Readers Question: Why might the public ignore future tax liabilities when making spending decisions? A tax liability is a tax bill that you will have to pay the government in the future. In theory, if you have a large tax liability in the future, you will reduce current consumption to be able to pay the …
Readers Question: Greece has a current account deficit of almost 14% (!) of GDP and Greece is a member of the EU. How can it resolve the problem if it cannot devalue the currency ( the quick way out, which was used in the past when the greek drachma was around) and when productivity is …
It is difficult to predict the dollar because there are few different factors pulling the dollar in different directions. Firstly, the dollar has been surprisingly resilient since the US slipped into its worst recession and US interest rates tumbled to near 0%. The resilience of the dollar is not based on economic fundamentals but, a …
Readers Question: supposing a government printed more money but only used it to finance the cost of imported goods, what then would be the effect on the domestic economy? supposing the price of these imported goods was the same as before the extra money was printed, there is just a larger quantity of them now. …