A list of the major recessions in UK and US. List of Recessions in UK Comparing different recessions 1919-21 Recession GDP fell 25% during the three years following the end of the First World War. Unemployment rose to 20% UK experienced deflation of 10% in 1921, and 14% in 1922 Causes of fall in GDP …
Readers Question: Hello can you please tell me what the disadvantages of using interest rates would be for the economy? Interest rates are used to try and achieve low inflation and stable, sustainable economic growth. However, interest rates are limited, they can’t always achieve all the governments’ macroeconomic objectives at once. Interest Rates and Inflation …
After keeping interest rates at close to zero for several years, the US Federal Reserve has moved to finally increase interest rates. This increase in interest rates is more significant than usual because it marks an end to the unique circumstance of ultra-low interest rates. The Federal Reserve has also indicated they expect to raise …
Readers Question: If the government has a national debt, why doesn’t it just print more money and pay it off? The problem is that printing money would cause inflation and effectively reduce the value of money. If you print more money the number of goods and services will stay the same, you just have more …
UK inflation since 1989. Definition – Inflation – Inflation is a sustained rise in the cost of living and average price level. Causes Inflation – Inflation is caused by excess demand in the economy, a rise in costs of production, rapid growth in the money supply. Costs of Inflation – Inflation causes …
Demand side policies include expansionary fiscal and monetary policies. For example, the govt could increase Govt spending and lower taxes. G is a component of AD, therefore, this will cause AD to increase, there may also be a multiplier effect causing AD to increase even more than the initial effect Lower tax rates will increase …
Should the government leave house prices to market forces, or actively intervene to prevent a house price crash? Arguments for intervention Falling House Prices Could cause a recession If house prices fall, it will cause significant problems for the UK economy. There will be a fall in consumer wealth, and declining house prices can lead …
Firms generally prefer inflation to be low and stable. If inflation rises above 3 or 4%, firms may see a rise in costs and uncertainty. Inflation can also cause firms problems of rising costs, falling profitability, and a decline in international competitiveness. However, inflation is not necessarily damaging for a firm – especially, if they …