Readers Question: why are banks still not lending despite the bail out and increase in money supply? If all this time they have taken risk, why cant they take risk anymore? They should have more borrowers now due to low interest rates,if they can help small business who need the money then growth can increase …
Readers Question: Evaluate policies which a government could adopt in response to falling behind mortgage payments The problems of mortgage defaults are explained here What can the government / monetary authorities do? Cut interest rates. The MPC can cut interest rates as long as inflation is not a problem. However, the government do not set …
Readers Question: Do you know if there is a link between an economic downturn and blood donation? Does more people unemployed mean people have more time to donate blood, are unemployed people under to much stress to donate blood or should governments pay for blood donars. First it depends whether blood donation is free (charitable …
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 Can you tell me: Is speculation on a hot real estate market a counterexample to the law of demand or indirect evidence of it? The Law of Demand One of the first things you learn in economics is the basic law of demand – When prices rise, people buy less. When prices fall, …
A look at why oil prices are volatile. Readers Question: Dear Economics Help. Why is the petrol price so volatile and why when oil price falls don’t the prices of other commodities and services stay the same? The price of petrol is closely linked to the price of oil. In 2008, the price of oil …
There is an interesting article in the Economist about immigration and the impact on the Irish economy. Immigration tends to encourage a range of emotive responses, but, its impact on the flexibility of labour markets is worth considering. In the boom years, Ireland was growing by up to 5% a year or more. Growth was …
The price of a small (illogically called the ‘Tall’) Starbucks Cappuccino is now £2.05. The Venti now costs £2.65 (2008 prices) This year the price of Starbucks drinks have increased by more than the rate of inflation. Costa Coffe and Cafe Nero have both kept their prices below £2, but, industry analysts argue that it …