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Income and wealth inequality in the UK are higher than most people think they are and higher than they think they should be. These are among the messages of a new online infographics film:read more...»
New data suggests that China will soon overtake the United States with the largest GDP adjusted for purchasing power parity. This short Financial Times video from Chris Giles looks at the new data which are being driven by fresh estimates of what money can buy - i.e. the volume of goods and services that are produced in different countries and what one dollar can buy in one country compared to another. The data finds that poorer countries are cheaper than economists thought they were and richer countries are more expensive.
China barely breaks into the top one hundred of the countries of the world in terms of GDP per capita (PPP) - it is a large country but not rich!
The 2011 gross domestic product (GDP) of the European Union, the United States and China together accounted for half of the world GDP in 2011. In 2011, the GDP of the 28-nations EU represented 18.6 percent of the world's GDP, expressed in Purchasing Power Standards (PPP). It was followed by the United States with a share of 17.1 percent and China with 14.9 percent.read more...»
A YouTube video aimed at helping students to avoid making some of the common mistakes in this exam.read more...»
In the year to March 2014, consumer prices in Sweden fell by 0.4 per cent. This has prompted the central bank, the Riksbank, to abandon the normally cautious language used by such institutions. Over the same period, inflation was negative in a further seven European countries, such as Greece, Portugal and Spain. In eight other countries, inflation was still positive but very low, running at an annual rate of less than 0.5 per cent.
The Riksbank argues that these very low, often negative, rates of inflation are caused by a ‘very dramatic tightening’ of monetary policy. There is a definite risk of a slide into a prolonged depression similar to that of the 1930s.
Surely low inflation is a good thing? Well, up to a point.read more...»
According to The Economist, much of the world faces a familiar supply side constraint: the need for massive investment in infrastructure.read more...»
In recent months the external value of the pound has been rising quite strongly. Indeed it has outperformed a cluster of other countries even though we have seen a rise in the UK's current account deficit on the balance of payments. Stephanie Flanders, chief market strategist at JPMorgan Asset Management, talks to the Financial Times about the sterling's out-performance and what impact the strong pound is likely to have on the UK economy.read more...»
The BBC's Robert Peston looks at the broader issue of heavy debt in the UK economy and whether it is holding back economic growth.read more...»
Nominal weekly wage growth is now running at approximately the same pace as consumer prices inflation hinting that a long period of declining real wages might be coming to an end. The precise measurement of whether real wages are no longer falling is open to doubt, what matters more is the longer run context. The UK has seen a persistent decline in real wages and this has undoubtedly affected the strength of the economic recovery from the 2008-09 recession.
As this short FT video shows, younger workers have seen the steepest declines in real wages.read more...»
At this time of the year many students are wanting to get up to speed with some of the important data for the UK economy so that they can consider including it in some of their exam answers. Here is a one page revision handout on the UK drawing on a large number of indicators and (as far as possible) providing the data for 2013. Sources used include the IMF, OECD and UK Treasury.read more...»
Measuring the size of an economy is difficult on so many levels. Of course, there’s always the GDP debate, which asks about the best way to measure economic and social progress. But even measuring GDP is a huge challenge. Nigeria has just experienced a vast 89% increase in GDP having ‘rebased’ its figures.read more...»
Using pubic data from the Asian Development Bank here are some illustrations of the structural changes in output that have occurred across a selection of countries in Far East Asia, Australia and New Zealand. Consider the magnitude of the changes that have taken place over the last twenty years. Note for revision which countries appear at the top and the bottom of each individual chart and think about WHY they appear in that position.read more...»
The Gini coefficient is a commonly-used measure of income inequality that condenses the entire income distribution for a country into a single number between 0 and 1: the higher the number, the greater the degree of income inequality.read more...»
Here is the second in our series of resources aimed to testing student knowledge of the key diagrams for their upcoming exams. Today's files are related to AS Macro diagrams.
The two files are aimed at teachers or students in the run up to their exams and assume that they have been covered previously.
Click here to download a Powerpoint file to use in class as a scrolling test (with accompanying music). The test lasts 4 minutes and then teachers can reveal the answers one at a time.
Click here to download a document file that tests the same diagrams but in a static document format for either teachers to use in class or for students revising for their exams.
This link takes you to yesterday's (Day one) blog for the AS micro equivalent.
This Financial Times video report looks at the economic transformation of East London prompted in part by high levels of inward investment from the Far East. Consider the economic benefits of this investment but also the challenges of rejuvenating a part of London which for decades has lagged behind the rest of the capital in nearly every economic and social metric,read more...»
Here is the third of our series of AS macro quizzes - ten questions to check your understanding - good luck!read more...»
Here is the second of our general AS macro revision quizzes - ten questions for you to have a go at!read more...»
Here is the first of our general AS macro revision quizzes - ten questions for you to have a go at!read more...»
Here is an extract from a recent speech by Charlie Bean at the Bank of England - the full speech can be found here: www.bankofengland.co.uk/publications/Docume...
For the economic recovery to be both sustained and sustainable we really want to see three things happenread more...»
We have considered the three key areas of macroeconomic policy – monetary policy, fiscal policy and supply-side policies.
In the longest essay questions on data response papers examiners often ask students to consider how effective these are when they are used to manage the economy. How can we judge whether the performance of the economy is improving as a result of them? In this session we will remember how to assess macroeconomic performance, think about some of the issues with measuring growth, and focus on ways to evaluate the effectiveness of different policiesread more...»
One of the most significant roles of a modern government is to ensure that the economy performs to its full capacity. The government has to consider the performance indicators like inflation, unemployment and economic growth and devise policies to achieve their aims. In this session we will consider the options that fall into the fiscal and monetary policyread more...»
Unemployment is one of the major macro-economic performance indicators. The more unemployed people in our economy the more we are producing below our potential, less income is earned (reducing saving, consumption and tax revenue) and there is a negative impact on the welfare of society.read more...»
In this session from our macro revision workshop, we are focus on the performance of the UK economy over recent years and see how economic growth appears to follow a cyclical patternread more...»
Falling unemployment, declining inflation and stronger growth – we are seeing a better picture for the UK in 2014? But can it last?
After several years of weak expansion, the UK economy is enjoying a relatively strong cyclical recovery. Can the UK continued to experience a recovery in output, jobs and investment? Will the recovery be balanced and sustainable? How resilient is the UK? What are some of the major threats to growth in 2014 and beyond? This revision presentation hopefully provides some context.read more...»
Here's a short but fun classroom starter to stimulate discussion about how the Government Spends its money.
Based upon information from a BBC article showing how Government spending has changed since 1953, the resource asks students to separate 'blocks' representing the percentage of overall spending on each department (e.g. health, defense) into those that they think represent spending in 1953 and those that represent 2013. Having separated the blocks, students must then re-arrange the blocks into perfect squares on the printable 'mats' provided as part of the resource.
As well as stimulating discussion about how the Government spends its money and changes in its priorities, it may provide a useful hook for getting your students to remember the proportion of spending the Government places on each of its department which they can use as evidence within their exam answers.
Click on this link to download the resource.
Click on this link to go to the original BBC article.
A revision presentation used at the workshop in Dubai on aspects of supply-side competitiveness in the UK economyread more...»
Here is a good applied example of how fiscal policy can be used to help improve the UK's net trade position. Export finance is often a problem especially for small and medium sized businesses looking to expand beyond the domestic economy to new export markets. Improving the trade position is a key aspect of re-balancing the economy and make the recovery more sustainable.
Membership of the European Union (EU) has had a big positive effect on average incomes in all but one of its member countries. That is the central finding of research by Nauro Campos, Fabrizio Coricelli and Luigi Moretti, to be presented at the Royal Economic Society’s 2014 annual conference. They also find that the more financially developed countries have grown significantly faster after joining the EU.read more...»
Here's an interesting addition to the GDP debate, which has heated up a good deal over the last couple of years. Is GDP a reliable indicator of economic progress? The Social Progress Index is another attempt at capturing more measures of development, so as to be a better guide to policy making. It's what economist Diane Coyle calls a 'dashboard' approach to measurement.read more...»
The UK’s official inflation benchmark, the Consumer Prices Index, slid to 1.7 per cent in February – the lowest for more than four years. What are some of the main factors causing inflation to fall below target?read more...»
A significant 5 year rail infrastructure investment plan adds weight to the belief that capital spending will be a major driver of the next phase of the UK economic recovery. Network Rail is state owned, a not-for-profit business whose commercial returns are reinvested into the rail network.read more...»
Britain’s current account deficit for 2013 as a whole (4.4% of GDP) was greater than in any other developed economy and the widening current account gap is raising fresh concerns about whether the UK's economic recovery is balanced and sustainable.read more...»
There seems little that is stopping the surge in London house prices at the moment but do you think the rapid acceleration of prices is good for either London or the wider UK economy?read more...»
A century ago, Scotland probably had the most globalised economy in the world. Since then, especially since the 1960s, Scotland has de- industrialised, and because industry is so much more globalised than other sectors, the economy has also ‘de-globalised’.read more...»
In this new RSA Short, Kate Raworth makes a powerful argument to look beyond economic growth alone for a true measure of prosperity and progress. Read more about Kate Raworth's work and her idea of doughnut economics by clicking this link http://www.kateraworth.com and follow her on twitter @KateRaworthread more...»
Here is a good example of an inward investment project likely to create a strong multiplier effect for the economy of East Yorkshire.read more...»
I thought it worthwhile sharing my resources which I have been collecting for students (and teachers alike). I have been promoting them on Twitter (@Economics_KSF) through scoop.it but for those of you not on there, the link for the scoop.it boards are here:read more...»
The basket of goods and services that makes up the products used when calculating changes in the cost of living is periodically updated to reflect shifting patterns of spending by UK households.read more...»
One type of market failure that contributes to inequality and unemployment is the geographical immobility of labour.
If the labour market really ‘cleared’ effectively, wages would equalise across the economy. Workers would drift away from regions with low wages and/or high unemployment towards areas where wages were higher and labour was scarce.
Why are people finding it hard to move across the UK in search of work?read more...»
Looking for something to use as a talking point for today's (19 March 2014) Budget Announcement from George Osborne? Click the link below to download a free resource from Tutor2u.
Using an updated version of our popular 'The Angry Economist' Powerpoint game, the resource lists 12 of the budget policies made and asks students to analyse and evaluate them by applying the policy to a randomly selected macro-economic objective (either low inflation, low unemployment, positive economic growth or a Current Account surplus).
Click on this link to download the activity. The link takes your to a Google Drive document - just download the file to your computer.
Note: The resource is editable - you can change the policies or details as you wish.
Showing critical awareness of economic statistics is an important skill for all economists.
A hat-tip to Fiona Quiddington for this article on youth unemployment from the Telegraph which analyses youth unemployment figures with a more critical eye.read more...»
The development of India, or its non-development relative to China, is an interesting topic, and one that Bob Hindle has already been blogged about in relation to its tax system.
However, there are other aspects of the Indian economy that will also impede its ability to grow, notably its lack (or should that be 'lakh'?) of coal.read more...»
If you are looking for a solid example of a manufacturing industry that experienced deep long term structural contraction then the UK steel sector is a good one to use.
Global steel output has more than doubled in the last four years but what remains of the UK steel industry is battling against rising costs and the challenge of meeting stringent climate change policies. The Financial Times visits Celsa's plant in Cardiff to find out if UK steelmakers still have a viable future. Can British producers take advantage of a rebound in steel output and profits if the European Union economy shows signs of a more durable and stronger recovery?read more...»
The government wants more new homes to be built, so too do hard-pressed home-buyers facing a continued problem of low property affordability. But cautious construction companies are reluctant to press ahead favouring share buy-backs (returning money to their shareholders) and only a limited expansion of new building.read more...»
Are skills shortages holding back the economic recovery? The Financial Times is running a video series looking at the problems businesses are having in recruiting people with technical skills. The apprenticeship programme is expanding but will it be enough to meet the growing gap between demand for and supply of engineers and other specialist jobs in industries surrounding precision engineering, nuclear power and many others?
According to an article in the Financial Times:
"Migrants are filling a fifth of jobs in industries such as oil and gas extraction, aerospace manufacturing and computer, electronic and optical engineering because of a lack of skilled British graduates."read more...»
Year 12 economist Tim Rawlinson considers some of the macroeconomic effects of five years of ultra low policy interest rates set by the Bank of England.read more...»
Our Economics team have been hard at work completing the all-new material for the AS Economics exam coaching & revision workshops this summer. For the pre-easter venues we focus on AS Macroeconomics (see outline programme below). At the post-easter venues we incorporate core micro and macro topics into one day.
Students attending these workshops will also be given a copy of Geoff Riley's new AS Macroeconomics Revision Guide.
Some screenshots of the AS Macro workshop booklet are provided below.
How to book places (subject to availability)
Email Janet Cahill with your confirmed numbers , or
Order online (including private individual students / groups), orread more...»
The 2014 Budget will take place on Wednesday 19 March. Here is a general knowledge quiz on the Budget and the current state of the UK economy that you might want to take to test your understanding! Good luck! We will be covering the budget speech and the economic background to it extensively here on the Tutor2u blog.read more...»
Here is a revealing quote from a special study published in March 2014
"Simply put, too much of the city’s essential infrastructure remains stuck in the 20th Century—a problem for a city positioning itself to compete with other global cities in today’s 21st Century economy."
Which city do you think this report was referring to?read more...»
There is plenty of evidence for the assertion that increases in indirect tax have led to the burden of of those regressive 'stealth taxes' falling on lower income earners. However, Norman Lamont, former Chancellor of the Exchequer, was on Newsnight on Thursday night to discuss the direct tax effects of income tax He was arguing for the threshold at which the higher tax rate of 40% kicks in to be raised.read more...»
Money, so it is said, makes the world go around. And to some extent it does. But it's not one of the functions of money that I teach in my lessons. The nature of money is fascinating and there are plenty of books that look at the subject, not least Philip Coggan's "Paper Promises: Money. Debt and the New World Order" or Felix Martin's "Money: The Unauthorised Biography". If we start from the premise that money is "anything generally accepted in payment of a debt" then this leads us into interesting territory.read more...»