Readers Question: Can you Spend Your Way to Full Employment? Full employment implies. An economy without a significant negative output gap. Full employment requires positive economic growth, averaging close to the long run trend rate of economic growth. (in UK long run trend rate = 2.5%) Very low unemployment. Economists would say full employment is …
Readers Question: How can a larger government fiscal deficit case a larger international trade deficit Firstly, it is important not to confuse the two deficits. Government fiscal deficit occurs when government spending is greater than tax revenues. The deficit is the annual government borrowing requirement, measured by Public Sector Net Borrowing. International Trade deficit implies …
“Don’t Panic, Captain Mainwaring.” – Dad’s Army The famous catchphrase could perhaps be adapted to UK debt levels. The 1940s and 1950s, were an example of high debt, but, it didn’t cripple the UK economy, the 1950s proved to be a decade of full employment and was one of the longest periods of economic expansion …
Readers Question: My question is if some many people are aware of this debt and credit problem, why are governments continuing this policy? Debt is nothing more than future taxes which has a crowding out effect. It is a statement that says, government is a more efficient player in the market than individuals. (from Rapid …
This e-book concentrates on macro economics, issues such as economic growth, recessions, the credit crunch, inflation and globalisation. It also takes a look at economic history and also in-depth look at recent economic events such as the European debt crisis, deflation, and levels of government debt.
Updated Sept 2015.
“Maintaining and expanding a nation’s stock of capital requires saving.” Evaluate and explain. Is the assumption of full employment of any relevance? Capital Stock is the level of productive capacity in the economy. Saving and Investment There is an important economic idea that Savings = Investment. The logic is that without bank deposits, banks are …
Definition of Efficient Market Hypothesis It is the idea that the price of stocks and financial securities reflects all available information about them. If new information about a company becomes available, the price will quickly change to reflect this. Three Types of Efficient market hypothesis Weak EMH. This states all past market prices and data …
Readers Question: From my studies in economics I have always known that when there is a recession, there is a high tendency for people to borrow at a low interest rate since there is a fall in the mpc due to high unemployment right? In a recession, people tend to borrow less and save more. …