No 195: Unemployment in Selected Countries 2005-2011

No 194: Spot of Economics' Economics News

EXCITING news! At great expense, Spot of Economics has started a TV news station......

GoAnimate.com: Economics news 1st march by spottygao

Like it? Create your own at GoAnimate.com. It's free and fun!


Deadly Tsunami Stops Japanese Economy
http://www.guardian.co.uk/world/2011/mar/13/japan-economy-recession-earthquake-tsunami

Report Argues for Big Changes in Public Sector Pensions
http://www.telegraph.co.uk/comment/columnists/alasdair-palmer/8378195/The-pensions-gravy-train-in-the-public-sector-has-to-be-derailed.html

European Union Holds Crisis Meeting Over National Debt
http://www.bbc.co.uk/news/business-12711183

Mervyn King Makes Attack on Banks
http://www.qfinance.com/blogs/ian-fraser/2011/03/07/boe-govenor-mervyn-king-and-the-case-for-reforming-britains-banks

Chinese Inflation Increases Again
http://www.telegraph.co.uk/finance/economics/8375605/Chinas-inflation-rises-to-4.9pc-in-February.html

World Has Most Billionaires Ever, According to New Report
http://www.forbes.com/wealth/billionaires
http://blogs.forbes.com/luisakroll/2011/03/09/the-worlds-billionaires-2011-inside-the-list/

No 193: Internet Buttons - Improved!

SOME of you know that I have used a website called "Internet Buttons" to, well, make some internet buttons leading to websites you need to check out.

To get there, go to www.internetbuttons.org . Then log in with Username: bellerbys / Password: bellerbys

You should then see something like this:

The buttons are colour coded according to the type of site they link to.

BLUE is for Economics and Business News.

GREEN is for Economics Blogs.

YELLOW is for Comment Articles by well-known economics writers. Reading these is now essential for A2 students.

ORANGE is for sites with Economics Revision Materials.

If there is another site you use and like, you can add a button too!

No 192: Some suggested reading from Other Teachers

SOME of the teachers in the Economics Department suggested to me that the following articles would be very useful for you to read.

Firstly Mr Bowen passed on this very interesting interview with Mervyn King, the Governor of the Bank of England. He gives his views on the Credit Crunch, and what he thinks about the current economic situation. He also does not seem to like the Banks much!


Notice the picture of Merv on the left - let me know if you can think of a good title for it!


http://www.telegraph.co.uk/finance/economics/8362959/Mervyn-King-interview-We-prevented-a-Great-Depression...-but-people-have-the-right-to-be-angry.html

Next, Mr Gray has suggested this article written by the Nobel Prize winning economist, Paul Krugman. In it he presents a moderate Keynesian view criticising the effect of austerity measures on economic recovery. It's very readable and very relevant!

As you can see, the person who wrote the title to this picture on the right, doesn't quite agree with Mr Krugman's views...... 

http://www.nytimes.com/2011/03/04/opinion/04krugman.html?_r=2

No 191: AS Summary for Government Spending as a Part of AD

THIS is the summary I wrote for AS students about G. 

Notice that this is a good topic to bring in some information about the arguments between Keynesian and Free Market economists.


Government Spending as a Part of Aggregate Demand

We studied the component of AD that measures government demand for goods and services, known as government spending (G). This contributes somewhere between 15 and 20% to UK Aggregate Demand.

Various factors influence the amount of G in the economy. These include the demand for merit and public goods, the current stage of the economic cycle, the amount of tax revenue, and technological progress in merit and public goods.

However, another extremely important factor is the economic and political ideology of the government. Free market economists believe that government spending is wasteful, inefficient, and can endanger the economy by too much borrowing. Government interventionists believe a relatively high level of government spending is necessary to correct market failures (especially inequality) and that government spending is the only way to boost the economy in a recession.

This idea (called demand management) was first suggested by the great economist John Maynard Keynes. He said that governments should borrow and spend more in a recession to help the economy. In a boom, they should spend less and try to save money (to be used during a recession).

However, free market critics argue that it is too difficult for governments to correctly decide how much and when to increase or cut spending, and therefore demand management may in fact make the situation worse. They also argue that while many governments during the Credit Crunch spent and borrowed more, very few saved money during the good times. Hence many countries have a huge amount of government debt now, which can cause many problems.

But, for many Keynesian economists, government spending is the most important part of AD, particularly in a recession. Furthermore, the effect of government spending is increased by the multiplier effect. In other words, an increase in G will lead to larger change in the national income of the country.

However, free market economists respond to this by arguing that because government spending is so wasteful, little of it actually gets to households, meaning that the value of the multiplier is in fact quite low.

In summary, this was yet another exciting class on Mr Spottiswoode’s economic course.

No 190: UK Trade in Goods and Services 1955-2010

THIS graph shows the UK balances for trade in goods, services, and goods and services put together.

There should be some clear trends you can see here.....

No 189: Very expensive luxuries!!!

THE picture below shows the most expensive handbag in the world, costing £2.35 million pounds.

It is covered with 4517 diamonds. It took 10 workers four months to make.

The handbag is produced by the House of Mouawad, a jewellry company from Dubai.
 
One of their previous products was a bra which cost £7 milllion!

(for more about the handbag click here)


The next picture shows an I phone, which has an actual Tyrannosaurus Rex tooth inside its cover - from over 65 million years ago (would have been hard to have got good network coverage back then.....)

However, this product "only" costs $65,000.

In other words, you could buy the handbag above or, for the same money, 59 T Rex Iphones.

As long as enough dinosaur teeth were available....

(to read more about the T Rex phone click here)

No 188: Pound Dollar Exchange Rate 1976-2010

FROM timetric via tutor2u, comes the first of a series of useful interactive graphs I will be posting in the next few weeks.

In recent homework, the answers to the graph question from Data Response have, to be honest, not been very good, so one way to use this graph is to practice for the exam by picking out key features.

Another use is to use your knowledge of UK economic history and to see what was happening to the £ / $ exchange rate during those periods.

No 187: AS Summary of Investment

DOES exactly what it says on the tin!

Investment as a Part of AD

We studied the component of AD that measures firms’ demand for capital goods, called investment. It forms about 15% of UK AD.

There are a number of factors that influence it, including interest rates, business confidence, depreciation of capital goods, future sales and demand, the expected rate of return, changes in costs, indirect taxes and subsidies, and technological changes in capital goods.

It could be argued that investment is the most important part of AD, since as well as leading to actual economic growth, it can also increase potential economic growth. We can show the former by a shift in the AD curve increasing Real GDP from Y1 to Y2, and the latter by a shift out in the PPF curve.

However, investment is also the most volatile part of AD. This is because businesses quickly cut investment in a downturn, both due to falling profits (reducing money available for investment) and less need to increase productive capacity. On the other hand, in a recovery it increases quickly, due to rising profit and more need to expand production to meet increasing consumer demand.

In summary, this was yet another exciting class on Mr Spottiswoode’s economic course.

 

No 186: Mr Bowen's Weekly Questions (2)

HERE they are, especially useful for micro topics this week.

(Not sure who Green Lung Free Rider is...)


All information is taken from The Daily Telegraph.

I've kept Mr Bowen's original typing style!



1.WHAT IS IPR? 

2. HOW IMPORTANT ARE THE CREATIVE INDUSTRIES IN THE UK AS A PROPRTION OF GDP?

3.WHY DOES JEREMY WARNER THINK THE GOVERNMENT HAS GOT THIS IPR REFORM OF COPYRIGHT LAW COMPLETELY WRONG?

4.WHY DOES THE LEADER ARTICLE THINK THAT THE UK GOVERNMENT HAS BEEN TOO OBLIGING TO NEWS INTERNATIONAL?

5. WHY WAS THE INDUSTRY SECRETARY[THE USUAL MINISTER FOR MERGER REFERRALS] NOT INVOLVED?  DOES THIS MATTER?

6.IN WHAT WAYS WERE THE USUAL PROCEDURES FOR EVALUATING MERGERS COMPLETELY IGNORED.?

  7.WHY DOES THE PROSOED MERGER CAUSE WORRIES FOR OTHER MEDIA GROUPS?

8.WHAT IS PREDATORY PRICING?

9. WHAT IS A PRICE WAR?

10. HOW COULD MURDOCH USE THESE CONCEPTS TO ELIMINATE THE COMPETITION?

11. WHAT IS PRICE FIXING?  HOW DOES IT OPERATE FOR E BOOKS? IS THIS A PROBLEM?

 

No 185: Summary of PED

FOR AS classes, I have been giving them short summaries as we finish each important topic.

Here is the summary about Price Elasticity of Demand.

Price Elasticity of Demand

We studied the measurement of how much a change in price will then lead to a change in the quantity demanded, called price elasticity of demand.

We calculate the percentage changes in Qd and in P, and then use them in a formula to calculate a PED value. All PED values are negative, due to the negative (or inverse) relationship between price and demand, called the law of demand.

If a change in price leads to no change in demand, the PED value is 0, and this is called perfectly inelastic demand.  If a change in price leads to a lesser change in demand, the PED value is between 0 and -1, and this is called inelastic demand. If a change in price leads to the same amount of change in demand, the PED value is 1, and this is called unit elastic demand. If a change in price leads to a larger change in demand, the PED value is more than -1, and this is called elastic demand. Differently sloped demand curves can also be drawn to show different PED values.

The PED of a particular product is affected by a number of factors. Firstly, the width of definition of the product needs to be decided (for example, are we discussing milk sold at Bellerbys Brighton, milk sold in the UK, all of the milk sold in the world….?). This is important to decide because it also helps us to decide the number of substitutes for the product. Next, we decide if the product is a necessity or a luxury, how addictive it is, and what percentage of income it takes to buy it. Putting all that information together, we can then say if we think the product will have elastic or inelastic demand, and predict a possible PED value for it.

Knowing the PED value of a product is especially important for firms, who can know whether it is better for them to have a higher or lower price. Firms with inelastic demand will gain more revenue from a higher price, while those with elastic demand get more revenue from a lower price.

In summary, this was yet another exciting class on Mr Spottiswoode’s economic course.