Austerity – Pros and Cons
A look at the pros and cons of austerity (government spending cuts). Is austerity a way to solve economic problems, or does it merely lead to a deeper recession and lower tax revenues.
Search Results for: current account surplus
Balance of Payments Disequilibrium
Readers Question: Explain what is meant by a balance of payments disequilibrium? The Balance of Payments is comprised of two main components: The Current Account (trade in goods, services + transfer payments and investment incomes) The Financial Account (used to be called capital account; this is capital flows such as foreign direct investment) If the …
Interest Rates and Balance of Payments
Readers Question: Interest Rates are increased by the governments to bring down inflation rates, this makes exports price competitive as well, as a result, exports increase. However, an increase in interest rates can lead to an appreciation of the currency as demand for the currency increases. So this again increases the price of exports as …
Government intervention in the foreign exchange market
Under certain circumstances, the government might want to intervene in the foreign exchange markets to influence the level of the exchange rate. Methods to Influence the Exchange Rate Reserves and Borrowing. If the value of an exchange rate is falling and the government wants to maintain its original value it can use its foreign exchange …
Foreign Currency Reserves
Readers Question: What is the main purpose of foreign reserves? Who decides what amount to be kept as reserve and how this reserve is financed? Could be please explain in detail? Definition of: Foreign Currency Reserves (Forex Reserves). This is the amount of foreign currency reserves that are held by the Central Bank of a …
European unemployment crisis
Unemployment in many European countries has risen sharply due to the credit crunch and global recession. The worst hit countries include Spain (ES) and Greece (EL), who both have unemployment rates of over 24%. In the past few months, there has been a slight reduction in European unemployment, but the prolonged period of mass unemployment …
IB Economics revision guide
- Specific IB Economics revision guide (Sections1,2,3,4) – just £8.95
- Updated for current IB Economics syllabus
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- Significantly expanded on the previous version, with not just required knowledge, but also examples of evaluation for each topic.
- For schools: Network License – IB Economics (£95.00) (allowing unlimited use)
- Sample (3 pages) IB Revision Guide
Benefits and Costs of Fixed Exchange Rates
Readers Question: Evaluate the advantages and disadvantages of both a floating exchange rate and a fixed exchange rate. Is there a “better” one to have? A fixed exchange rate occurs when a currency is kept at a certain level compared to other currencies. In practice, many of them are semi-fixed exchange rates like the Exchange …