Readers Question: I am currently researching the impact of the global economy on inflation in the UK. I have come across economic policy uncertainty but am unsure what effect policy uncertainty in the EU and USA will have on the UK. UK inflation is primarily due to domestic factors. For example, if you look at …
In a previous post, we saw how bank lending in the UK fell during the credit crunch, contributing to the length and depth of the recession. Because of this the Bank of England and Government have sought to try and increase bank lending – in order to help stimulate economic growth. Fall in bank lending. …
Credit policy / financial policy is the use of the financial system to influence aggregate demand (AD). Monetary policy affects AD through the Central bank controlling interest rates and the money supply. Fiscal policy affects AD through the use of government spending and taxation. Credit policy looks at factors such as: Bank lending rates to …
Readers Question: how to revise for a possible exam question like: discuss the likely effectiveness of ‘expansionary fiscal and monetary policies as means of closing the output gap’ Firstly write down the question on a blank piece of paper. Then try and revise in three parts. Part One – Knowledge define terms Expansionary fiscal policy …
Readers Question: Why do countries that experience a boom risk losing international competitiveness? An economic boom implies that an economy is growing above its long term trend rate. This means that the rate of economic growth is high, but there tend to be inflationary pressures because demand is growing faster than supply. The impact of …
Readers Question: Hi, just been watching tv about independence and the Scottish leader says our balance of payments would double if there was no oil money and they had their own money. What would happen to the English pound? would it go down? In 2012, the UK exported £39.6 bn worth of oil. In 2012, …
Another guide to inflationary pressures is the producer price index (PPI). Producer inflation measures the price of goods produced by manufacturing firms. This is sometimes referred to as ‘factor gate prices’ In the year to February 2013 the output price index for home sales of manufactured products rose 2.3%. In the same period the total …
Readers Question: Can you tell what Portugal has done to reduce the Current Account GDP deficit so steeply? The reduction in the Portuguese deficit is quite striking. In researching the answer to this question, I came up with a different post – The Portuguese Economic crisis From what I can gather, essentially, the rapid reduction …