EconomicsNotes

    The United Kingdom in 2022 is facing an historic energy problem.   An island sitting on top of vast reserves of coal, surrounded by gas and oil in its waters, and with great hydroelectric potential, has seen vast increases in energy pricing and has become dependent on foreign gas, without having significant storage capacity. In addition, a ‘green’ environmental agenda, recently compounded by ‘net zero’ policies with regard to carbon, has generated massive subsidies to underperforming renewable resources, and a confused and restrictive policy with regard to nuclear power. As world gas prices rise because of competition from East Asia and declines in supply, a price cap and marketisation policy in gas markets has caused the collapse of a large number of domestic gas suppliers and a forced increase in the cap which caused many bills to rise by over 50%. There is every indication that these bills will rise further. The microeconomic effects of this rise are simple to ...

  Departure from the European Union obviously carries with it micro- and macro-economic effects. Only one country has so far left the union (the UK) but others may choose to do so in the future. As a general rule, prediction is not predictive; circumstances and contexts apply. The terms on which a state might leave matter. Nevertheless, there are things which all governments and voters contemplating such a move might bear in mind. The EU is a customs union and contains a single market. A customs union, by definition, creates one tariff on imports around the zone, and a single market ensures smooth trade, a common baseline of standards and regulations, and the free movement of capital, products, goods and services, people, and investment. Any state which left such an arrangement would, even with a comprehensive trade deal, become a third party. It could no longer influence the tariff decisions of the bloc after a transition period, and would without a deal have to pay the import...

The balance of payments is the measure of all economic transactions between an economy and the rest of the world. As such, it covers the whole economy and should not be confused with the Government Budget. The balance of payments must always balance and if there is a deficit or surplus in goods, services, or some other component of the balance, it will be met with an equal change in the value of money or other asset. In a free exchange market, for instance, the currency of the country will adjust to alter living standards and the source of any surplus or deficit. The balance of payments consists of a current account, known as the balance of trade , a financial account , and a capital account. The current account is a record of net exports, plus income from abroad and direct transfers into a country. Many countries, particularly in the English-speaking world, run a deficit on this current account, because consumers and businesses purchase more imports than exports. This may well...

  The Trade Cycle In a note below,  I have tried to describe the broad outlines of the cycles you will come across in economics. However, in terms of the trade cycle, what the examiners are looking for is an understanding that  economic growth fluctuates over time.  This is a regular and normal process, often driven by a ‘boom and bust’ approach to spending, inventories, borrowing, or assets. What one hopes for is that the  long term trend of economic growth  is actually upwards. You will find references to fiscal policy being ‘balanced over the cycle,’ or to ‘corrections,’ and ‘cyclical adjustments.’ These all refer to the idea that a kind of upward sloping sine wave is a better aid in visualising the economy’s progress than a straight line could be. You might be interested in the following links:  https://www.economicshelp.org/blog/11437/economics/why-is-the-aggregate-demand-ad-curve-downward-sloping/ https://www.economicshelp.org/blog/643/unemployme...