The Bank of England has the task of setting base interest rates to try and meet the government’s inflation target of 2%. The base rate is the rate at which the commercial banks have to borrow from the Bank of England. The Bank manages the money supply so that commercial banks usually end up having …
Banks play a key role in the financial system and wider economy. Therefore governments have been concerned about regulating banks to avoid banks defaulting on promises. If one bank gets into difficulties through reckless borrowing or illegal activities it can harm the whole banking system. The credit crunch of 2007-08 caused the Government to consider …
To barter means to trade goods directly rather than through the medium of money. Thus a barter economy is one where money does not exist or has ceased to be functional. It means consumers have to gain goods through exchange. Primitive economies developed through bartering goods. But, this is very inconvenient for a developing and …
Definition of Base Rate. In the UK, the base rate is the term given to describe the interest rate which the Bank of England control. The base rate is the rate that the Bank charge commercial banks and discount houses. It is also known as the Repo Rate. The base rate is used to influence …
Definition of base year: the starting point for the construction of an index number series. The base period or base year refers to the year in which an index number series begins to be calculated. This will invariably have a starting value of 100. For example, in constructing the Consumer price index, the government may …
The fundamental economic problem is the issue of scarcity and how best to produce and distribute these scare resources. Scarcity means there is a finite supply of goods and raw materials. Finite resources mean they are limited and can run out. Unlimited wants mean that there is no end to the quantity of goods and …
In the UK, the basic rate of income tax is 20%. It is the rate than most taxpayers will pay. It is important to note that this is a marginal tax rate and so is only paid on income above the tax threshold. In the UK, the tax threshold is £10,600 for 2013/14 Therefore, if …
Definition of Basis points. basis points is used as a description of measuring changes in the percentage rates. Example of Basis Points Use If the Central bank cut base rates by 0.25%. We often say there has been a cut of 25 basis points. If rates were increased from 2% to 3% we say there …