Summary. A look at policies a country can consider to increase the value of a currency. Readers Question: I was wondering, what are some of the policies and possibilities a country can use to increase the value of their currency? Specifically, countries who would be trying to “overthrow” the US dollar like China, India, Brazil, …
Some facts about the UK economy. GDP In 2018, UK GDP stood at $2,809 trillion (£2,217) According to IMF, the UK GDP ranked 5th in nominal terms. Behind Germany (4th) and ahead of India (6th) Measured according to Purchasing Power Parity (adjusted for living costs, the UK ranked 9th The Great Moderation. Between 1993 and …
Herding behaviour refers to how individual decisions are influenced by group behaviour. It stems from the observation that if a herd of animals starts moving in one direction, all the animals want to follow the herd. Why herding behaviour occurs Following the crowd. In economics, we can see a similar behaviour. For example, if individuals …
Do speed cameras help reduce accidents and make our roads safer? Or do speed cameras merely raise revenue whilst failing to reduce fatalities? If exceeding the speed limit increases the risk of fatal and serious accidents should we not seek to enforce speed limits? Which is more important the freedom to drive (and speed) or …
The UK recession of 1991 was primarily caused by high-interest rates, falling house prices and an overvalued exchange rate. Membership of the Exchange Rate Mechanism (1990-1992) was a key factor in keeping interest rates higher than desirable. The recession also came after the late 1980s economic boom – a period of high economic growth and …
After the UK’s decision to leave the EU, what economic problems will it face? Summary of problems Devaluation of Pound Sterling, increasing price of imported goods, such as food, oil, manufacturers and domestic inflation. This cost-push inflation is again putting pressure on real wages. WIth low nominal wage growth – inflation has led to falls …
A look at the impact of strong (overvalued) currency Readers Question: Why would a strong currency be bad for a country? If we consider a country like an individual, having a strong currency means the country can accumulate more assets and resources for its people, thereby increasing the value of its country. As for the …
The real effective exchange rate measures the value of a currency against a basket of other currencies; it takes into account changes in relative prices and shows what can actually be bought. Sterling effective exchange rate index. Nominal exchange rate The nominal exchange rate measures the current value of a currency against another. For example, …