Excess consumption of sugar is linked to several health problems, such as obesity, diabetes, and tooth decay. Consumption of sugar imposes costs on individuals (lower life expectancy) and the rest of society (higher health care costs + lower productivity). A tax on sugar would discourage consumption and raise tax revenue to fund improved health care. …
Originally published in March 2015. Current inflation rate (Feb 2020) is 1.3%. I was 0.7% out. But there was no skill in predicting inflation of 2%. If Ii had to predict inflation for 2025, I would predict the same = 2%. Reader’s Question: What will be the inflation rate in 2020? Firstly, I can’t resist …
Readers Question: What caused the massive decrease in the debt to GDP ratio for the UK following World War II? It is a good question to ask. In the past few years, many European policymakers have felt that rising debt levels needed panic levels of austerity/spending cuts. But, that didn’t happen in the UK in …
An essay on the economic effects of a falling dollar. Between 2006 and early 2008, there was a 15% fall in the trade-weighted value of the dollar. Then from 2008 to 2011, there was another fall of around 15%. In summary, a fall in the value of the dollar will have these effects. Makes US …
In a recession, fiscal policy and monetary policy can, in theory, be used to increase aggregate demand and boost economic growth. However, in practice, there can be many difficulties with preventing a recession. If the world economy was to get close to recession in 2020, could policymakers act decisively to prevent a recession? Factors …
Readers Question: How does the MPC predict future inflation? Inflation is caused by a mixture of demand-pull and cost-push factors. Therefore, the MPC will look at many statistics which give an indication of whether the economy is reaching full employment and causing inflationary pressures. This will include rate of economic growth, unemployment and the amount …
The economic cycle plays an important role in macroeconomics. Typically every 8-10 years, there is a recession (fall in output) or at least an economic downturn. Recessions tend to last for between six months and up to 2 or 3 years. But, even the deepest recession tends to end and the economy returns to a …
Flexible Labour Markets mean that the labour markets quickly adjust to a competitive equilibrium. Flexible labour markets involve factors such as: Easy to hire and fire workers. Labour is occupationally and geographically mobile. Government intervention does not distort the market. Characteristics of flexible markets A skilled workforce which can adapt to changing requirements. Flexible hours and …