Readers Question: What are the benefits of “supply-side” economics, particularly for the working class, the middle-class if you will? Supply-side policies encompass a range of different policies that seek to reduce tax rates and government intervention in the economy. In the US, supply-side economics has become synonymous with the Laffer Curve theory and the Reagan …
Supply is price inelastic if a change in price causes a smaller percentage change in supply. (PES of less than one) Example of inelastic supply – Price of rents falls by 20%; Q.Supply declines by 1%. PES = 0.05 Diagram of inelastic supply In this case, an increase in price from £30 to £40 has …
Discrimination in the labour market occurs when employers make decisions on wages and employment based on prejudices, such as race, gender, religion. It can lead to variations in wages for the same job and different employment rates. Kenneth Arrow defined discrimination as: “the valuation in the market-place of personal characteristics of the worker that are …
The original Phillips curve suggested there was a trade-off between nominal wages and unemployment. Higher demand led to rising wages and a fall in unemployment. Lower aggregate demand (AD) led to a fall in nominal wages, but a rise in unemployment. This was adapted to suggest a trade-off between unemployment and inflation. During the 1950s …
Aggregate supply is the total value of goods and services produced in an economy. The aggregate supply curve shows the amount of goods that can be produced at different price levels. When the economy reaches its level of full capacity (full employment – when the economy is on the production possibility frontier) the aggregate supply …
The market supply curve shows the combined quantity supplied of goods at different prices. The market supply curve is the horizontal sum of all individual supply curves. Linear Supply curve A linear supply curve can be plotted using a simple equation P = a + bS a = plots the starting point of the supply …
It is getting close to the summer exams, and one reader asked if I had any tips for memorising information. Some things that worked for me Read then close book. I used to read a book, then close and try to remember was is in the closed book. If I couldn’t remember, I’d check and …