Readers Question: I’d like to ask you about routine ways (apart from so called “printing new money”) by which the total volume of money in the economy grows. The money supply measures the stock of money in the economy. A narrow definition of money (M0) includes the stock of notes/coins and operational deposits at Bank …
Prices and incomes policy is an attempt by the government to set the rate of increase in prices and the rate of wage increases in the economy. The government do not seek to control individual prices but control the general rate of increase in prices and incomes. Price and incomes policy may involve ‘voluntary’ agreements …
There are a few different reasons firms may put up prices, but in each case, a business will weigh up the pros and cons. Potential reasons for increasing prices An increase in costs of production. A general increase in the price level (inflation) Competitors are increasing the price. Firms believe demand has become more price …
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 …
Readers Question: What is the importance of economics? Economics is concerned with the optimal distribution of resources in society. The subject involves Understanding what happens in markets and the macroeconomy. Examining statistics about the state of the economy and explaining their significance Understanding different policy options and evaluating their likely outcomes. Examples of the importance …
Any potential merger must give details to the OFT. If the OFT is concerned they can refer the merger to the Competition and Markets Authority, which can examine whether the merger is in the public interest. CMA has the power to investigate a merger if Turnover of the new firm exceeds £70 million or The …
Economics affects our daily lives in both obvious and subtle ways. From an individual perspective, economics frames many choices we have to make about work, leisure, consumption and how much to save. Our lives are also influenced by macro-economic trends, such as inflation, interest rates and economic growth. Summary – why economics is important The …
Definition of Monopoly A pure monopoly is defined as a single seller of a product, i.e. 100% of market share. In the UK a firm is said to have monopoly power if it has more than 25% of the market share. For example, Tesco @30% market share or Google 90% of search engine traffic. Monopoly …