In the UK there are two main measures of unemployment – The claimant count (number receiving unemployment benefits) ILO – Labour Force Survey (A survey which asks – are you unemployed and actively seeking work?) Graph showing unemployment levels UK Unemployment In recent years, the gap between the labour force survey and the claimant count …
A devaluation leads to a decline in the value of a currency making exports more competitive and imports more expensive. Generally, a devaluation is likely to contribute to inflationary pressures because of higher import prices and rising demand for exports. However, the overall impact depends on the state of the economy and other factors affecting …
Companies often offer student discounts – from 10% to 50% off. What is the logic behind this student discount – is it compassionate pricing for hard-up students or is there good economic logic to increase profits for firms? Charging different prices to different groups of consumers is known as price discrimination. The idea is that …
Readers Question: Is rise in prices a reflection of economic growth? A sustained rise in prices is known as inflation. A large rise in prices / higher inflation rate is often caused by economic growth. However, there are also occasions, when we can get inflation despite weak or negative economic growth. Inflation caused by economic …
Technological unemployment occurs when developments in technology and working practices cause some workers to lose their jobs. Technological unemployment is considered to be part of a wider concept known as structural unemployment. Example of technological unemployment When labour-saving machines are introduced into the productive process, a firm can get rid of workers and produce the …
Readers Question: What is the cause of deflation? Deflation involves a fall in the price level – a negative rate of inflation. From a very basic standpoint, there are two main potential causes of deflation: A fall in aggregate demand (AD) A shift to the right of aggregate supply (AS) – i.e. lower costs of …
Readers Question: What Happens when Inflation is Higher than Interest Rates? A negative real interest rate means that inflation is higher than interest rates. Therefore, savers will see a fall in the real value of their savings. For example in 2011, CPI inflation was 5%. Bank of England Base interest rates are 0.5% In theory, …
The claimant count records the number of people receiving unemployment benefits from the government. In the UK, the claimant count currently measures everyone who receives Job Seekers Allowance (JSA). To receive JSA, the applicant must be actively seeking work and provide evidence and commitment of efforts to find work. The claimant count method is one …