http://www.tutor2u.net/blog/index.php/economics/ en tutor2u.net Copyright 2012 2012-02-12T07:41:03+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/unit-2-macro-chinas-trade-engine-is-spluttering http://www.tutor2u.net/blog/index.php/economics/comments/unit-2-macro-chinas-trade-engine-is-spluttering#When:15:57:56Z New data suggests that the rapid growth of exports from China is once again slowing down. This Reuters business news video (2 minutes) provides some useful background information on the recent downturn in export and import volumes and mentions that rising imports and a shrinking trade surplus may help the Chinese to rebalance their economy and perhaps provide a demand stimulus for exporters from struggling European countries. That said the continued weakness of many EU countries will make it difficult for Chinese exporters to maintain sales and employment. During the global recession of 2008-09 millions of workers in Chinese manufacturing industry lost their jobs prompting many to return to their rural homelands in search of work and income. * Which industries in China are likely to be most affected by a reduction in the growth of exports? AS and A2 Specifications, AQA Economics Unit 2, EdExcel Economics Unit 2, AS Macro, Balance of Payments, Emerging Economies, China Economy, Cycles and Shocks, Aggregate Demand, Global Economy, International Trade, 2012-02-10T15:57:56+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/unit-2-macro-focus-on-china-trade-and-growth http://www.tutor2u.net/blog/index.php/economics/comments/unit-2-macro-focus-on-china-trade-and-growth#When:15:11:46Z Export demand can be an important driver of growth and development. For many years China has practiced export-led growth with exports accounting for over 40% of GDP. China ran a trade surplus with the rest of the world of around of $200 billion in 2009 – this looks huge, but is fairly modest as a share of GDP. The surplus on the balance of payment current account has diminished from over 10% of GDP in 2007 to less than 6% in each of 2010 and 2011. But China still has a structural trade / BoP surplus. AS and A2 Specifications, AQA Economics Unit 2, AQA Economics Unit 4, EdExcel Economics Unit 2, A2 Macro, AS Macro, Emerging Economies, China Economy, Cycles and Shocks, Aggregate Demand, Economic Growth, Global Economy, 2012-01-27T15:11:46+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/unit-2-macro-focus-on-china-per-capita-incomes http://www.tutor2u.net/blog/index.php/economics/comments/unit-2-macro-focus-on-china-per-capita-incomes#When:21:07:18Z Per capita incomes in China are rising though still low by advanced-nation levels. China ranks at 119 in terms of average incomes, according to World Bank data (per capita incomes, PPP adjusted). But China is now the biggest car market in the world and there has been a huge rise in the sales of luxury goods to China (these products have a strong income elasticity of demand).  China wants to achieve a re-balancing of her growth – towards domestic consumption and away from exports. Another key aim of the plans for the next 5 years is a surge in market-driven entrepreneurial activity. Plus a continued shift towards higher-value, high-knowledge manufactured products. AS and A2 Specifications, AQA Economics Unit 2, AQA Economics Unit 4, EdExcel Economics Unit 2, EdExcel Economics Unit 4, A2 Macro, AS Macro, Emerging Economies, China Economy, Cycles and Shocks, Aggregate Demand, Global Economy, International Trade, Poverty and Inequality, Standard of Living, 2012-01-26T21:07:18+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/unit-2-macro-exporting-to-the-booming-chinese-economy http://www.tutor2u.net/blog/index.php/economics/comments/unit-2-macro-exporting-to-the-booming-chinese-economy#When:14:47:32Z Before you read this blog please have a look at another blog written by our good friend Mark Johnston from New Zealand. Students of China and the US economy will find it fascinating! There are good grounds for no longer calling China an emerging economy - it has arrived! The multiple significance of the rapidly-growing Chinese economy is plain for all to see but for Britain, only a small percentage of our exports of goods and services go there and this must change if Britain is to fully engage with and benefit from the rising might of the Chinese consumer. AS and A2 Specifications, AQA Economics Unit 2, EdExcel Economics Unit 2, AS Macro, Balance of Payments, Emerging Economies, China Economy, Business Economics, Cycles and Shocks, Aggregate Demand, Economic Growth, Global Economy, International Trade, Macroeconomic Policies, Trade Policies, Manufacturing Industry, UK Economy, 2012-01-23T14:47:32+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/unit-2-macro-look-upwards-to-find-the-next-downturn http://www.tutor2u.net/blog/index.php/economics/comments/unit-2-macro-look-upwards-to-find-the-next-downturn#When:03:34:05Z Correlation does not necessarily imply causation but analysts at Barclays Capital are worried that a surge in skyscraper construction in China and India might be a forward indicator of another burst of financial and economic distress. This report in the Independent covers their findings: “Clusters of building activity usually coincide with periods of easy credit, excessive optimism and rising land prices, which often occur before market corrections.” * India is scheduled to complete 14 new skyscrapers taller than 240 meters (787 feet) over the next five years from the current two * China will increase the number of skyscrapers to 141, from the current 75, by 2017 * London’s Shard is expected to be completed in 2012 – at 1,017ft, it will be the tallest building in Western Europe News video from the BBC: Skyscrapers ‘linked with impending financial crashes’ Guardian news video: Huaxi: the village that towers above China   AS and A2 Specifications, AQA Economics Unit 2, EdExcel Economics Unit 2, AS Macro, Emerging Economies, Business Economics, Economies of Scale, Cycles and Shocks, Aggregate Demand, Capital Investment, Economic Growth, Global Economy, Teaching of Economics, 2012-01-16T03:34:05+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/newsnight-on-rebalancing-the-uk-economy http://www.tutor2u.net/blog/index.php/economics/comments/newsnight-on-rebalancing-the-uk-economy#When:05:11:19Z Last night’s edition of Newsnight should be required viewing for all AS and A level economists - and it is a huge shame that it is only available on i-player for another 7 days. Introduced on the shock news that even Tesco is vulnerable to the downturn, it included reports from Andrew Verity looking at whether the British economy will ever wean itself off shopping and the City, and an excellent (and all-female!) discussion including Deborah Meaden and the FT’s Gillian Tett. Try challenging your students to watch and listen to this while noting down every aspect of the syllabus which is mentioned or referred to - that will keep them busy! There was also a debate between Employment Minister Chris Grayling and disability campaigner Sue Marsh about the government’s welfare reforms, defeated in the House of Lords the night before, and finally Tokyo correspondent Roland Buerk looking at Japanese economic stagnation of the late 1980s and 90s, to consider whether it was a “lost decade” and what could be learnt from it. A2 Macro, AS Macro, Business Economics, Cycles and Shocks, Aggregate Demand, Economic History, Economic Growth, Global Economy, Government Intervention, Macroeconomic Policies, Manufacturing Industry, OECD Economies, Japan Economy, Poverty and Inequality, Standard of Living, Teaching of Economics, UK Economy, Unemployment, 2012-01-13T05:11:19+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/unit-4-macro-economics-of-fiscal-deficit-reduction http://www.tutor2u.net/blog/index.php/economics/comments/unit-4-macro-economics-of-fiscal-deficit-reduction#When:14:54:41Z How far, how fast and in what way should the UK government seek to cut the annual budget deficit and improve the state of public sector finances? These questions continue to be at the centre of a fierce debate among economists. AS and A2 Specifications, AQA Economics Unit 4, EdExcel Economics Unit 4, A2 Macro, Cycles and Shocks, Aggregate Demand, Macroeconomic Policies, Fiscal Policy, Keynesian Economics, UK Economy, Recession Watch, 2012-01-12T14:54:41+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/unit-4-macro-competitive-advantage-in-trade-some-videos http://www.tutor2u.net/blog/index.php/economics/comments/unit-4-macro-competitive-advantage-in-trade-some-videos#When:11:43:21Z Here is a selection of short video clips that I use when teaching competitive advantage in markets and when introducing the factors that determine the competitiveness of UK producers in global markets. The focus here is on the UK economy but I will add some more videos to the blog as I work my way through this teaching topic. AS and A2 Specifications, AQA Economics Unit 4, EdExcel Economics Unit 4, A2 Macro, AS Macro, Balance of Payments, Emerging Economies, Business Economics, Cycles and Shocks, Aggregate Demand, Economic Growth, Economics of Technology, Global Economy, International Trade, Macroeconomic Policies, Supply-side policies, Teaching of Economics, UK Economy, Regional Economics, 2012-01-12T11:43:21+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/unit-2-macro-factors-driving-business-investment http://www.tutor2u.net/blog/index.php/economics/comments/unit-2-macro-factors-driving-business-investment#When:13:42:35Z Profit-seeking businesses will go ahead with an investment if they believe that it will - over its projected lifetime - yield a real rate of return greater than if the money had been invested in the next best alternative way. Opportunity cost is a useful idea to use here. Private sector businesses usually focus on these objectives when investing in new capital inputs: AS and A2 Specifications, AQA Economics Unit 2, EdExcel Economics Unit 2, AS Macro, Business Economics, Cycles and Shocks, Aggregate Demand, Capital Investment, Macroeconomic Policies, Keynesian Economics, UK Economy, 2012-01-10T13:42:35+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/hopes-and-fears-2012 http://www.tutor2u.net/blog/index.php/economics/comments/hopes-and-fears-2012#When:07:32:19Z With consumption being such a large component (approximately 2/3rds) of aggregate demand, it is important to understand the role that consumer confidence plays when decisions are made upon major spending commitments. A2 Macro, AS Macro, Cycles and Shocks, Aggregate Demand, Consumer Spending, 2012-01-10T07:32:19+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/changing-consumer-behaviour-falling-incomes http://www.tutor2u.net/blog/index.php/economics/comments/changing-consumer-behaviour-falling-incomes#When:13:15:29Z What links rising VAT and energy prices, higher unemployment, loss of bonuses, a reduction in overtime and more part-time working? AS and A2 Specifications, A2 Macro, AS Macro, Cycles and Shocks, Aggregate Demand, Consumer Spending, Standard of Living, UK Economy, Recession Watch, 2011-12-19T13:15:29+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/where-is-the-uk-economy-national-output http://www.tutor2u.net/blog/index.php/economics/comments/where-is-the-uk-economy-national-output#When:05:18:41Z The first of an occasional series - putting economic data into context. First we focus on the level of real national output in the UK in the aftermath of the recession and with recovery appearently grinding to a halt. UK GDP remains well below the peak of national output at the end of the last cycle in the early months of 2008. During the recession, national output fell by a cumulative 7 per cent. Since then there has been a slow and uncertain recovery and the Bank of England has recently slashed their growth forecasts for the remainder of 2011 and for 2012. Growth of less than 1 per cent will cause unemployment to rise and will damage business and consumer confidence (animal spirits) and further undermine planned capital investment spending. There is a real danger than UK trend economic growth (the estimated annual growth of potential GDP) will continue to edge lower affecting living standards and any chance of the government meeting its medium term deficit reduction targets. Bank of England: Bank of England finds risk of crisis biggest since 2008 AS and A2 Specifications, AQA Economics Unit 2, AQA Economics Unit 4, EdExcel Economics Unit 2, EdExcel Economics Unit 4, A2 Macro, AS Macro, Cycles and Shocks, Aggregate Demand, Macroeconomic Policies, UK Economy, Recession Watch, 2011-11-23T05:18:41+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/unit-2-macro-video-clips-on-unemployment http://www.tutor2u.net/blog/index.php/economics/comments/unit-2-macro-video-clips-on-unemployment#When:12:53:51Z I blogged last week about unemployment and made available some updated charts on unemployment for the UK and a range of other countries. Here are some short video news clips on aspects of unemployment that I have been using when teaching unemployment to AS and A2 groups. These clips provide a window on the human and social cost of high rates of unemployment and are especially useful in reinforcing the causes of unemployment and evaluation of policies likely to be most effective in bringing jobless rates down over time. AS and A2 Specifications, AQA Economics Unit 2, AQA Economics Unit 4, EdExcel Economics Unit 2, EdExcel Economics Unit 4, A2 Macro, AS Macro, Cycles and Shocks, Aggregate Demand, Macroeconomic Policies, Supply-side policies, Keynesian Economics, Market Failure, Factor Immobility, Teaching of Economics, UK Economy, Regional Economics, Unemployment, 2011-11-06T12:53:51+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/unit-1-micro-costs-and-benefits-of-a-super-sewer-for-london http://www.tutor2u.net/blog/index.php/economics/comments/unit-1-micro-costs-and-benefits-of-a-super-sewer-for-london#When:22:38:37Z Thames Water has plans for a super sewer running 20 miles from Hammersmith to Beckton but the plan has come up against intense opposition from many local resident groups. It is a good example to use of cost-benefit analysis in action with a project that will directly affect millions of people living and working in the capital. There is an almost unending list of stakeholders involved in the debate. AS and A2 Specifications, AQA Economics Unit 1, EdExcel Economics Unit 1, A2 Micro, AS Micro, Business Economics, Economies of Scale, Cost Benefit Analysis, Cycles and Shocks, Aggregate Demand, Capital Investment, Environmental Economics, Market Failure, Externalities, Public Goods, Market Equilibrium and Price, Nature of Supply, Teaching of Economics, 2011-11-01T22:38:37+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/unit-2-macro-analysing-government-spending-cuts http://www.tutor2u.net/blog/index.php/economics/comments/unit-2-macro-analysing-government-spending-cuts#When:07:36:53Z It is rare that a day would go by without you being able to find a news article on issues that affect the macro-economy; a good tip is to constantly think like an economist and analyse these issues as you may do in the exam. AS Macro, Cycles and Shocks, Aggregate Demand, Aggregate Supply, Macroeconomic Policies, Fiscal Policy, 2011-10-25T07:36:53+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/unit-2-macro-positive-and-negative-multiplier-effects http://www.tutor2u.net/blog/index.php/economics/comments/unit-2-macro-positive-and-negative-multiplier-effects#When:07:44:03Z An initial change in aggregate demand can have a much greater final impact on equilibrium national income. This is known as the multiplier effect. It comes about because injections of new demand for goods and services into the circular flow of income can stimulate further rounds of spending – in other words “one person’s spending is another’s income”. Put another way, spending becomes someone else’s income. This can lead to a bigger eventual effect on output and employment. Here are three recent news videos covering aspects of the multiplier effect at work: AS and A2 Specifications, AQA Economics Unit 2, EdExcel Economics Unit 2, AS Macro, Cycles and Shocks, Aggregate Demand, GCSE Economics, Teaching of Economics, UK Economy, Unemployment, 2011-10-14T07:44:03+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/unit-2-macro-can-exports-drive-a-recovery http://www.tutor2u.net/blog/index.php/economics/comments/unit-2-macro-can-exports-drive-a-recovery#When:14:12:47Z UK overseas trade is in the news today with the release of a batch of figures showing a record level of UK exports - see BBC news - UK trade deficit cut by higher exports AS and A2 Specifications, AQA Economics Unit 2, EdExcel Economics Unit 2, AS Macro, Balance of Payments, Business Economics, Cycles and Shocks, Aggregate Demand, Global Economy, Macroeconomic Policies, Trade Policies, UK Economy, Recession Watch, 2011-10-13T14:12:47+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/unit-4-macro-unit-labour-costs-and-inflation http://www.tutor2u.net/blog/index.php/economics/comments/unit-4-macro-unit-labour-costs-and-inflation#When:11:53:25Z Over many years the rate of change of unit labour costs (ULCs) has been a decent reliable indicator of inflationary pressures in the UK economy. Times when wage costs adjusted for productivity have grown quickly have often coincided with a rise in the annual rate of inflation - little wonder when payroll costs are a sizeable chunk of operating expenses for many businesses. But in the last couple of years we have seen a growing disconnect between unit labour cost inflation and the published figures for CPI. AS and A2 Specifications, AQA Economics Unit 2, EdExcel Economics Unit 2, AS Macro, Cycles and Shocks, Aggregate Demand, Consumer Spending, Labour Market, Macroeconomic Policies, Standard of Living, UK Economy, Recession Watch, Unemployment, 2011-10-12T11:53:25+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/unit-2-macro-uk-suffers-a-weak-recovery http://www.tutor2u.net/blog/index.php/economics/comments/unit-2-macro-uk-suffers-a-weak-recovery#When:08:34:36Z AS macro students will be studying the economic cycle and following the struggles of many countries to sustain a recovery in demand, output and jobs after the 2008-09 recession. The well respected independent forecasting body, the National Institute (NIESR) has produced new data suggesting that the UK recovery is on course to be “the weakest of any since the end of the First World War”, with gross domestic product still 4pc below its pre-recession peak. The risks of a second recession (a double dip) look to be rising week by week especially when one looks at the consumer and business confidence data. Here is a link to the NIESR report and also to BBC news coverage of their findings. AS and A2 Specifications, AQA Economics Unit 2, EdExcel Economics Unit 2, AS Macro, Cycles and Shocks, Aggregate Demand, Economic Growth, Macroeconomic Policies, Teaching of Economics, UK Economy, Recession Watch, 2011-10-12T08:34:36+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/unit-1-rice-market-intervention http://www.tutor2u.net/blog/index.php/economics/comments/unit-1-rice-market-intervention#When:15:56:09Z A good example to discuss of government intervention into agricultural markets - in this case Thailand’s government have intervened in the market to buy unmilled rice at 15,000 Thai baht per metric tonne, which is a 50% premium on the current market rate. A good discussion of the possible impacts can be found, with a discussion of the economic rationale/consequences of it, here. AS Macro, Cycles and Shocks, Aggregate Demand, Global Economy, Credit Crunch, Inflation and Deflation, Macroeconomic Policies, Monetary Policy, 2011-10-09T15:56:09+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/will-jean-claude-trichet-be-missed http://www.tutor2u.net/blog/index.php/economics/comments/will-jean-claude-trichet-be-missed#When:14:09:46Z JCT is no longer president of the European Central Bank and he leaves, after eight years at its helm, with as many detractors as there are supporters. The ECB is widely perceived as being ‘genetically’ close to the German Bundesbank following the neo-classical school where inflation is the route of all problems and so needs to be controlled no matter the cost. AS Macro, Cycles and Shocks, Aggregate Demand, Global Economy, Credit Crunch, Inflation and Deflation, Macroeconomic Policies, Monetary Policy, 2011-10-09T14:09:46+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/a2-micro-concentration-ratio-for-the-us-smartphone-market http://www.tutor2u.net/blog/index.php/economics/comments/a2-micro-concentration-ratio-for-the-us-smartphone-market#When:13:58:21Z We´re going to be looking at this part of the syllabus very soon and the two graphics below from here and here look at how the US market for smartphone operating systems is split between the major firms and also how global market share for mobiles as well as smartphones is split. AS Macro, Cycles and Shocks, Aggregate Demand, Global Economy, Credit Crunch, Inflation and Deflation, Macroeconomic Policies, Monetary Policy, 2011-10-07T13:58:21+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/king-on-qe2 http://www.tutor2u.net/blog/index.php/economics/comments/king-on-qe2#When:13:50:15Z The Govenor, Mervyn King, explains how he hopes that by injecting 75 billion of newly printed cash into the economy Aggregate Demand will be stimulated enough to avoid a double dip. See video below and the full article here. AS Macro, Cycles and Shocks, Aggregate Demand, Global Economy, Credit Crunch, Inflation and Deflation, Macroeconomic Policies, Monetary Policy, 2011-10-07T13:50:15+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/fat-tax-denmark http://www.tutor2u.net/blog/index.php/economics/comments/fat-tax-denmark#When:21:33:17Z Earlier this year, the Royal Economics Society had the Young Economist of the Year competition with one of the titles being to debate the use of a Fat Tax. This week, Denmark have announced exactly such a tax on some of its foods! Read more here. Supporting article on the Danish fat tax from Time Magazine And this feature on the efficiency and equity arguments surrounding the fat tax from Steve Sexton writing in the Freakonomics blog. AS Macro, Cycles and Shocks, Aggregate Demand, Global Economy, Credit Crunch, Inflation and Deflation, Macroeconomic Policies, Monetary Policy, 2011-10-05T21:33:17+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/fuel-for-thought http://www.tutor2u.net/blog/index.php/economics/comments/fuel-for-thought#When:14:08:49Z When teaching elasticities, fuel always seems to have been a favourite example of a good with very inelastic demand in response to price changes.  However, this AA research adds further to the evidence that suggests that even fuel has now reached it’s limit in terms of quantity demanded remaining firm at it’s market price. AS Micro, Cycles and Shocks, Aggregate Demand, Global Economy, Credit Crunch, Inflation and Deflation, Macroeconomic Policies, Monetary Policy, 2011-10-05T14:08:49+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/ali-g-and-demerit-goods http://www.tutor2u.net/blog/index.php/economics/comments/ali-g-and-demerit-goods#When:00:14:34Z When discussing demerit goods, it is always good to be able to show a few examples. In these youtube clips, Ali G interviews a police superintendent about offensive weapons and a US federal agent about illegal drugs. AS Macro, Cycles and Shocks, Aggregate Demand, Global Economy, Credit Crunch, Inflation and Deflation, Macroeconomic Policies, Monetary Policy, 2011-10-05T00:14:34+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/3-for-2-no-more http://www.tutor2u.net/blog/index.php/economics/comments/3-for-2-no-more#When:16:58:45Z The book world was shaken this month when it emerged that Waterstone’s, the UK’s largest book chain, is going to ditch its decade-old 3-for-2 offer. Good for A2 micro when discussing firms’ strategies for growth and profit. Read more here. AS Macro, Cycles and Shocks, Aggregate Demand, Global Economy, Credit Crunch, Inflation and Deflation, Macroeconomic Policies, Monetary Policy, 2011-10-03T16:58:45+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/unit-2-macro-consumer-spending-charts-for-the-uk http://www.tutor2u.net/blog/index.php/economics/comments/unit-2-macro-consumer-spending-charts-for-the-uk#When:16:49:33Z As a follow up to my homework assignment I have attached below in a powerpoint file a set of data charts used as handouts and a prompt for discussion in our AS macro lessons on consumer spending. Consumer_Spending_Charts.pptx AS and A2 Specifications, AQA Economics Unit 2, EdExcel Economics Unit 2, AS Macro, Cycles and Shocks, Aggregate Demand, Consumer Spending, Teaching of Economics, UK Economy, 2011-10-03T16:49:33+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/unit-2-macro-homework-assignment-on-consumer-spending http://www.tutor2u.net/blog/index.php/economics/comments/unit-2-macro-homework-assignment-on-consumer-spending#When:16:45:49Z I have attached below an example of a homework assignment for my Unit 2 macro economic group which focuses on some of the main drivers of consumer demand for goods and services. It is available for free download as a pdf file. Discussion in class will centre on income, wealth, interest rates, confidence and expectations as key determinants. This is a particularly important stage of the economic cycle and there are many influences constraining household demand as we head towards the end of 2011. AS_Macro_EW_Conusmption.pdf AS and A2 Specifications, AQA Economics Unit 2, EdExcel Economics Unit 2, AS Macro, Cycles and Shocks, Aggregate Demand, Consumer Spending, Global Economy, Credit Crunch, Inflation and Deflation, Macroeconomic Policies, Teaching of Economics, UK Economy, 2011-10-03T16:45:49+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/unit-1-micro-homework-assignment-on-market-prices http://www.tutor2u.net/blog/index.php/economics/comments/unit-1-micro-homework-assignment-on-market-prices#When:02:11:00Z I have attached below a homework assignment for my Unit 1 AS Micro students on market prices. The assignment focuses on the global markets for coffee and also for steel and is attached below as a pdf file for download if teaching colleagues might like to use and adapt it! AS_Micro_Market_Prices_EW.pdf AS Macro, Cycles and Shocks, Aggregate Demand, Global Economy, Credit Crunch, Inflation and Deflation, Macroeconomic Policies, Monetary Policy, 2011-10-03T02:11:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/changing-consumer-behaviour-taxing-saturated-fat http://www.tutor2u.net/blog/index.php/economics/comments/changing-consumer-behaviour-taxing-saturated-fat#When:21:22:11Z The government in Denmark, has introduced additional taxes on foods which contain more than 2.5% saturated fat. It will add 25p on packets of butter, 8p on crisps. This BBC news clip introduces this new fiscal measure. AS and A2 Specifications, AQA Economics Unit 1, AQA Economics Unit 2, EdExcel Economics Unit 1, EdExcel Economics Unit 2, OCR AS Economics Unit F581, OCR AS Economics Unit F582, AS Macro, AS Micro, Cycles and Shocks, Aggregate Demand, Consumer Spending, Market Failure, Standard of Living, UK Economy, Recession Watch, 2011-10-02T21:22:11+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/china-helping-or-hindering-economic-development-in-africa http://www.tutor2u.net/blog/index.php/economics/comments/china-helping-or-hindering-economic-development-in-africa#When:18:57:18Z If Africa was a physical battleground between east & west during the cold war of the 20th Century, it can arguably be seen today as the ideological 21st Century battleground between the difference approaches to promoting economic development: the western aid model versus the Chinese trade model. Is the Sino-Africa relationship mutually beneficial? I certainly don’t claim to have a comprehensive answer to this but it has been interesting talking to Africans on my journey so far about their perception of this, particularly in Zambia… AS Macro, Cycles and Shocks, Aggregate Demand, Global Economy, Credit Crunch, Inflation and Deflation, Macroeconomic Policies, Monetary Policy, 2011-10-02T18:57:18+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/as-and-a2-macro-exchange-rates-and-safe-haven-currencies http://www.tutor2u.net/blog/index.php/economics/comments/as-and-a2-macro-exchange-rates-and-safe-haven-currencies#When:13:51:47Z This article from the WSJ highlights one determinant of exchange rates that we may not be too familiar with, whether or not a particular currency is regarded as a “safe haven” i.e. if a particluar investor fears that a currency will not hold its immediate or future value, then said investor may choose to exchange it for one which is more likely to. AS Macro, Cycles and Shocks, Aggregate Demand, Global Economy, Credit Crunch, Inflation and Deflation, Macroeconomic Policies, Monetary Policy, 2011-10-02T13:51:47+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/economics-resources-best-of-today-podcasts http://www.tutor2u.net/blog/index.php/economics/comments/economics-resources-best-of-today-podcasts#When:21:34:59Z A hat tip to my fellow blogger Graham Carter for suggesting this handy resource. The BBC web site maintains a regularly-updated selection of podcasts drawing on some of the best stories covered by the Today programme. Here is the link. Dip in once in a while to see if there is an audio-resource connected to relevant business, economic and financial news stories. AS Macro, Cycles and Shocks, Aggregate Demand, Global Economy, Credit Crunch, Inflation and Deflation, Macroeconomic Policies, Monetary Policy, 2011-09-30T21:34:59+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/unit-4-macro-savings-and-banking-to-enhance-development http://www.tutor2u.net/blog/index.php/economics/comments/unit-4-macro-savings-and-banking-to-enhance-development#When:08:40:00Z A hat tip to Patrick North from Crown Woods College for spotting this excellent article on growth and development strategies in Mozambique. The piece focuses on the efforts of Mozambique to increase participation in the banking system to boost savings, investment and ultimately growth and is a good illustration of the Harrod-Domar growth model. AS and A2 Specifications, AQA Economics Unit 4, EdExcel Economics Unit 4, OCR A2 Economics Unit F585, A2 Macro, AS Macro, Emerging Economies, Development Economics, Cycles and Shocks, Aggregate Demand, Saving, Macroeconomic Policies, Supply-side policies, Teaching of Economics, 2011-08-16T08:40:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/unit-2-macro-reducing-unemployment-after-a-recession http://www.tutor2u.net/blog/index.php/economics/comments/unit-2-macro-reducing-unemployment-after-a-recession#When:12:30:00Z How quickly do people find new work after they have been made redundant and experienced a period of unemployment? According to new research published in the May 2011 edition of the Economic Journal, only around one person in every ten unemployed in Britain finds fresh work within a month and nearly half of the extra unemployed created in the wake of an economic shock such as the fallout from the global financial crisis are still without a new job after six months. If government economic policies and the labour market generally are failing to get people back into paid jobs the impact of a recession on unemployment rates can last for a substantial time period bringing with it increased economic and social costs. AS and A2 Specifications, AQA Economics Unit 2, AQA Economics Unit 4, EdExcel Economics Unit 2, EdExcel Economics Unit 4, A2 Macro, AS Macro, Cycles and Shocks, Aggregate Demand, Labour Market, Macroeconomic Policies, Market Failure, Factor Immobility, UK Economy, Recession Watch, Unemployment, 2011-07-11T12:30:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/global-economy-increased-risk-of-future-shocks http://www.tutor2u.net/blog/index.php/economics/comments/global-economy-increased-risk-of-future-shocks#When:07:05:00Z A new OECD report on the risks of external shocks to the global economy looks like being really useful for teachers preparing fresh materials for their courses. “The interconnectedness of the global economy makes it more vulnerable to major shocks…...these shocks include cyber attacks, pandemics, geomagnetic storms, social unrest and financial crises.” The report can be downloaded here. AS and A2 Specifications, AQA Economics Unit 4, EdExcel Economics Unit 4, OCR A2 Economics Unit F585, A2 Macro, AS Macro, Emerging Economies, Business Economics, Management Issues, Cycles and Shocks, Aggregate Demand, Aggregate Supply, Environmental Economics, European Economy, Global Economy, Credit Crunch, Government Intervention, Macroeconomic Policies, OECD Economies, Teaching of Economics, UK Economy, 2011-06-28T07:05:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/a2-macro-consumer-spending http://www.tutor2u.net/blog/index.php/economics/comments/a2-macro-consumer-spending#When:10:59:00Z Consumer (or household) spending on goods and services is driven by a number of factors, the relative importance of which will vary over the course of an economic cycle and from one cycle to another. The Keynesian theory describes a consumption function where household spending is directly linked to people’s disposable income AS and A2 Specifications, AQA Economics Unit 4, EdExcel Economics Unit 4, A2 Macro, Cycles and Shocks, Aggregate Demand, Consumer Spending, 2011-05-30T10:59:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/the-big-money-test-a-behavioural-economics-experiment http://www.tutor2u.net/blog/index.php/economics/comments/the-big-money-test-a-behavioural-economics-experiment#When:15:01:00Z Significant effort is made by teachers, companies and the government to try and educate people about managing their financial affairs, but often to no avail. Indeed, the book Nudge suggests that even financial experts often struggle to make the ‘right’ or ‘best’ decision. A new experiment has been designed that aims to examine how people make financial decisions - and you can take part! Firstly, visit this BBC website to find out a bit more about the experiment, then look at what is being termed ‘money sanity’ here, before taking the Big Money Test. Behavioural Economics, Cycles and Shocks, Aggregate Demand, Consumer Spending, Financial Markets, Teaching of Economics, Wildcard Wednesday, 2011-05-25T15:01:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/uk-economy-as-seen-by-the-bank-of-england http://www.tutor2u.net/blog/index.php/economics/comments/uk-economy-as-seen-by-the-bank-of-england#When:19:55:01Z Students who want to be able to quote current data and trends in the UK economy could do worse than spending some of their revision time picking out the highlights from the Bank of England’s Agents Summary of Business Conditions, published today. There is plenty of opportunity to find evidence which can be used to back up evaluative arguments in macroeconomics papers here. Key points 1/ Growth in domestic markets is sluggish at best, but investment in the export sector looks better, probably driven by the rise in exports to emerging markets, Germany and the US. 2/ The service sector looks far from buoyant, with so much spare capacity that investment intentions are low and recruitment in consumer services is down. 3/ Unsurprisingly, import and raw material prices are driving a need to pass on cost push inflation to buyers, although many found that their power to pass on price increases to consumers was very limited, in spite of widespread awareness of the increase in costs - reflecting fears that price elasticity is very high at the moment. A2 Macro, AS Macro, Balance of Payments, Commodities Markets, Cycles and Shocks, Aggregate Demand, Capital Investment, Labour Market, International Trade, Macroeconomic Policies, UK Economy, 2011-05-18T19:55:01+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/interest-rates-held-at-05-once-again http://www.tutor2u.net/blog/index.php/economics/comments/interest-rates-held-at-05-once-again#When:23:03:00Z The Monetary Policy Committee decided to keep interest rates unchanged at 0.5%, a rate which offers little comfort to savers and pensioners groups who have seen a significant fall in interest paid out on deposit accounts, i.e. falling incomes from savings. The Base Rate is at a historically low level, its lowest rate since the foundation of the Bank of England. AS and A2 Specifications, AQA Economics Unit 2, AQA Economics Unit 4, EdExcel Economics Unit 2, EdExcel Economics Unit 4, A2 Macro, AS Macro, Cycles and Shocks, Aggregate Demand, Macroeconomic Policies, Monetary Policy, UK Economy, 2011-05-05T23:03:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/as-macro-extended-house-price-deflation http://www.tutor2u.net/blog/index.php/economics/comments/as-macro-extended-house-price-deflation#When:18:59:00Z A pessimistic forecast for the UK economy produced by the National Institute for Economic and Social Research (NIESR) suggests that the UK housing market is set to remain in the doldrums for some time to come. The NIESR has predicted a 4.5 per cent average fall in house prices in real terms this year, with further falls averaging 1.5 per cent for the following five years. The background to this forecast of house price deflation is that mortgage finance remains hard to come by (there has been a steep fall in the average mortgage loan to house price deal on offer). And mortgage interest rates are set to rise from their current low levels.  Weak demand is thus the main driver of falling prices. The NIESR argues that “(housing) supply constraints were less important than is often argued since supply just about kept pace with household formation.” AS and A2 Specifications, AQA Economics Unit 2, EdExcel Economics Unit 2, AS Macro, Cycles and Shocks, Aggregate Demand, Housing Economics, Macroeconomic Policies, Market Equilibrium and Price, Nature of Demand, Price Mechanism in Action, Teaching of Economics, UK Economy, 2011-05-05T18:59:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/as-macro-essay-plan-on-rising-imports http://www.tutor2u.net/blog/index.php/economics/comments/as-macro-essay-plan-on-rising-imports#When:15:53:00Z Here is an essay plan on this question: Assess the extent to which a rise in imports may affect macroeconomic performance (25 marks). Like many macro questions, the focus is on the longer-term performance of the economy – this requires a brief explanation at the start of the answer – e.g. economic growth, unemployment, inflation and material well-being. The essay plan can be downloaded using the link below: Essay_Plan_Imports_Economy.pdf AS and A2 Specifications, AQA Economics Unit 2, AQA Economics Unit 4, EdExcel Economics Unit 2, EdExcel Economics Unit 4, A2 Macro, AS Macro, Balance of Payments, Cycles and Shocks, Aggregate Demand, Aggregate Supply, International Trade, UK Economy, 2011-04-24T15:53:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/rise-in-investment-could-kick-start-recovery http://www.tutor2u.net/blog/index.php/economics/comments/rise-in-investment-could-kick-start-recovery#When:20:42:00Z UK businesses are sitting on a pile of cash and need to loosen the purse strings and invest more according to new research from Ernst and Young. Their latest macroeconomic forecast for the UK can be found here. There has been a shift in the share of total factor incomes flowing to workers and a corresponding rise in the share of profits in GDP (by factor income). Ernst and Young find that wages and salaries in the UK fell from 46.5% of GDP to 45.3% last year, while the share of non-financial company profits increased from 15.9% to 16.2%. The non-financial company financial surplus increased from £56 billion to £71 billion, almost 5% of GDP helped by a fall in interest payments on debt and a sharp fall in dividend payments. For economists at Ernst and Young, the cash mountain provides a big opportunity for the UK economy. They are urging companies either to step up capital spending commitments including creating extra capacity to export products. Or return surplus cash to shareholders through bigger dividends. The Ernst and Young forecast shows business investment in the UK increasing by 12.3 % this year and another 14.1% in 2012. With housing investment slowly recovering, this easily outweighs the effect of lower public sector investment, pushing total investment up by 5.7% this year and 8.1% in 2012. Higher investment provides a boost to aggregate demand and also the economy’s productive capacity. And a rise in exports will help to re-balance the economy. For cash to be committed to investment projects requires sufficient business confidence and this is where the Keynesian idea of animal spirits becomes so important to where the UK economy is heading over the next year or two. AS and A2 Specifications, AQA Economics Unit 2, EdExcel Economics Unit 2, AS Macro, Business Economics, Cycles and Shocks, Aggregate Demand, Capital Investment, Macroeconomic Policies, UK Economy, Recession Watch, 2011-04-18T20:42:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/uk-economy-at-a-glance http://www.tutor2u.net/blog/index.php/economics/comments/uk-economy-at-a-glance#When:08:31:00Z Here is an updated word document covering many of the key UK macroeconomic indicators - focusing on aggregate demand, growth, inflation, the labour market, fiscal and monetary policy, trade and exchange rates. It provides a summary of the data from 2009-2011(forecast) and provides brief comments on each - designed as a revision aid for students taking their AS and A2 Economics papers this summer. The document can be downloaded using these links: UKEconomy2011Summary.docx UKEconomy2011Summary.pdf AS and A2 Specifications, AQA Economics Unit 2, AQA Economics Unit 4, EdExcel Economics Unit 2, EdExcel Economics Unit 4, A2 Macro, AS Macro, Cycles and Shocks, Aggregate Demand, Macroeconomic Policies, Teaching of Economics, UK Economy, Recession Watch, 2011-04-17T08:31:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/as-macro-key-term-real-disposable-income http://www.tutor2u.net/blog/index.php/economics/comments/as-macro-key-term-real-disposable-income#When:15:47:00Z Disposable income is personal income that remains after direct taxes and government charges have been paid. Real disposable income is the post tax and benefit income available to households after an adjustment has been made for price changes. Changes in real disposable income are thought to have a strong relationship over time with the level of consumer spending on goods and services. The Keynesian theory of consumption focused on this link between current real disposable income and household spending and saving. But keep in mind that expectations of future changes in post tax and benefit income also have a role in determining spending levels. AS and A2 Specifications, AQA Economics Unit 2, EdExcel Economics Unit 2, AS Macro, Cycles and Shocks, Aggregate Demand, Consumer Spending, UK Economy, 2011-04-11T15:47:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/as-macro-key-term-double-dip-recession http://www.tutor2u.net/blog/index.php/economics/comments/as-macro-key-term-double-dip-recession#When:22:10:00Z A double-dip recession happens when an economy goes into recession twice without having undergone a full recovery in between. There are several different possible causes of a double-dip recession: AS and A2 Specifications, AQA Economics Unit 2, EdExcel Economics Unit 2, AS Macro, Cycles and Shocks, Aggregate Demand, Aggregate Supply, Macroeconomic Policies, Keynesian Economics, UK Economy, 2011-04-08T22:10:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/timetric-uk-balance-of-trade-with-china http://www.tutor2u.net/blog/index.php/economics/comments/timetric-uk-balance-of-trade-with-china#When:21:08:00Z There is a noticeable trend in the monthly trade balance! UK exports to China have grown over the years but the trade imbalance has widened enormously! According to former Business Secretary, Lord Mandelson UK exports to Brazil, Russia, India and China - the so-called ‘Bric countries’ - are lagging behind the rest of the world. The share of exports to the four BRIC nations remains persistently below our 3.7% share of world trade. Some economists point to an “export gap” worth £19.8bn with China, £3.2bn with India, and £1.8bn with both Russia and Brazil.   AS and A2 Specifications, AQA Economics Unit 2, AQA Economics Unit 4, EdExcel Economics Unit 2, EdExcel Economics Unit 4, OCR A2 Economics Unit F585, A2 Macro, AS Macro, Balance of Payments, Emerging Economies, China Economy, Cycles and Shocks, Aggregate Demand, Global Economy, Teaching of Economics, UK Economy, 2011-03-13T21:08:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/timetric-uk-consumption-as-a-share-of-gdp http://www.tutor2u.net/blog/index.php/economics/comments/timetric-uk-consumption-as-a-share-of-gdp#When:20:26:00Z There is much talk in macro-economic policy circles of “re-balancing the economy” as a prelude to sustaining economic growth in the future. One aspect of this is addressing the long-term increase in importance of household spending as a share of national income (GDP). As our Timetric chart shows, the proportion of GDP accounted for by consumer spending on goods and services has edged higher over the years from 58% in 1980 to nearly two thirds of GDP in the credit-fuelled spending boom of the last few years. AS and A2 Specifications, AQA Economics Unit 2, AQA Economics Unit 4, A2 Macro, AS Macro, Cycles and Shocks, Aggregate Demand, Consumer Spending, Global Economy, Credit Crunch, Macroeconomic Policies, UK Economy, 2011-03-12T20:26:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/as-macro-revision-investment-spending http://www.tutor2u.net/blog/index.php/economics/comments/as-macro-revision-investment-spending#When:09:10:01Z This revision blog looks at the drivers of capital spending and the importance of investment for economic performance AS and A2 Specifications, AQA Economics Unit 2, EdExcel Economics Unit 2, AS Macro, Cycles and Shocks, Aggregate Demand, Capital Investment, Economic Growth, Macroeconomic Policies, UK Economy, 2011-03-12T09:10:01+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/the-consumer-pants-index-cpi http://www.tutor2u.net/blog/index.php/economics/comments/the-consumer-pants-index-cpi#When:16:36:00Z GDP, unemployment rates, inflation, imports, exports, mortgage approvals - how else can we assess the current state of the economy? This article from Lovemoney.com suggests a whole new kind of CPI for us to consider, as well as other ‘unofficial indicators’ of the economy’s health. Might be fun way to kick off a lesson. AS and A2 Specifications, AQA Economics Unit 2, AQA Economics Unit 4, A2 Macro, AS Macro, Cycles and Shocks, Aggregate Demand, Economic Growth, UK Economy, 2011-03-01T16:36:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/us-pay-day-loan-firms-set-for-rapid-expansion-in-the-uk http://www.tutor2u.net/blog/index.php/economics/comments/us-pay-day-loan-firms-set-for-rapid-expansion-in-the-uk#When:20:42:01Z The financialisation of the British economy continues apace. This article in the Guardian reports that US pay day loan businesses (regulated loan sharks to you and me) are planning a rapid and sizeable entry into the UK consumer credit market. In part this might be because in the UK there is little or no effective regulation on what they can charge. Cash-strapped families often denied credit by high street banks are vulnerable to the heavy marketing of these businesses - students will know of one of them Wonga the shirt sponsor for Blackpool FC. The typical pay day loan is around £75 to £750, which is deposited in their bank account in as little as 15 minutes, to be repaid in around two to four weeks but with interest rates that can easily reach 30% a month or higher. The pay day loan market might be a good case study for students wanting to understand more about the demand for credit and discussions about whether there should be a maximum price or cap on the interest rates that can be charged. AS and A2 Specifications, AQA Economics Unit 1, AS Micro, Cycles and Shocks, Aggregate Demand, Consumer Spending, Global Economy, Credit Crunch, Government Intervention, Maximum Prices, Macroeconomic Policies, Monetary Policy, Market Equilibrium and Price, Price Mechanism in Action, 2011-02-13T20:42:01+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/5-fresh-links-videos-to-attract-fdi http://www.tutor2u.net/blog/index.php/economics/comments/5-fresh-links-videos-to-attract-fdi#When:19:04:00Z I am teaching European and Global context for A2 macro this term and one of the key topics is the economics of EU enlargement. The opportunities to attract inflows of direct investment is one of the major attractions for new EU countries as they enter the single market. Here is a selection of videos promoting FDI into a selection of European nations. AS and A2 Specifications, AQA Economics Unit 4, A2 Macro, AS Macro, Cycles and Shocks, Aggregate Demand, Capital Investment, European Economy, EU Enlargement, Single Market, Macroeconomic Policies, Supply-side policies, Trade Policies, Teaching of Economics, 2011-02-04T19:04:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/wildcard-wednesday-financial-jargon http://www.tutor2u.net/blog/index.php/economics/comments/wildcard-wednesday-financial-jargon#When:08:04:00Z A BBC news story from earlier this month on confusing financial jargon provides the inspiration for today’s extension activity. The National Employment Savings Trust (NEST) is concerned that many consumers struggle to understand the choices that they are making with regards to selecting pension plans and knowing what to do with them when the time comes to retire, just because the wording used in the policies is full of jargon. Cycles and Shocks, Aggregate Demand, Consumer Spending, Financial Markets, Teaching of Economics, Wildcard Wednesday, 2011-02-02T08:04:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/martin-weale-argues-for-higher-interest-rates-now http://www.tutor2u.net/blog/index.php/economics/comments/martin-weale-argues-for-higher-interest-rates-now#When:08:03:00Z The newest member of the Monetary Policy Committee - Martin Weale - makes the case here in this article in the Guardian for an early and modest rise in base interest rates. AS and A2 Specifications, AQA Economics Unit 2, AQA Economics Unit 4, EdExcel Economics Unit 2, A2 Macro, AS Macro, Cycles and Shocks, Aggregate Demand, Inflation and Deflation, Macroeconomic Policies, Monetary Policy, Teaching of Economics, UK Economy, 2011-02-01T08:03:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/james-dyson-on-innovation http://www.tutor2u.net/blog/index.php/economics/comments/james-dyson-on-innovation#When:07:56:00Z This is a must read article for every student who wants to appreciate the impact of innovation on competitiveness and growth. Writing in the Business Guardian, James Dyson argues that “For me, the UK economy shouldn’t be built entirely on the City of London or the next digital fad. We need substance – patentable exports. They bring new money into our coffers. And what will generate economic growth is not just talk of spending cuts, but creating the right environment for research and invention.” Dyson is a strong supporter of tax credits and lower corporation tax for research and development projects and also for science and maths graduate teachers to be paid more. More here: Innovation: Britain’s other deficit Tories look to Dyson on hi-tech economy (BBC news video) AS and A2 Specifications, AQA Economics Unit 2, AQA Economics Unit 4, EdExcel Economics Unit 2, EdExcel Economics Unit 4, A2 Macro, AS Macro, Business Economics, Cycles and Shocks, Aggregate Demand, Aggregate Supply, Economic Growth, Economics of Technology, Global Economy, Government Intervention, Macroeconomic Policies, Supply-side policies, Manufacturing Industry, OECD Economies, Teaching of Economics, UK Economy, 2011-02-01T07:56:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/introducing-tuesday-talks http://www.tutor2u.net/blog/index.php/economics/comments/introducing-tuesday-talks#When:07:31:00Z Last week, my extension class and I watched a thought-provoking short TED talk by Rachel Botsman on the increasingly prevalent phenomenon of collaborative consumption - the talk is shown further below. According to Botsman, collaborative consumption is the use of bartering, swapping or sharing of consumer goods (usually durables) using technology to help the manage these collaborative relationships between strangers. The idea provides a great contrast to the ‘standard’ approach to thinking about consumer expenditure in an economy. A2 Macro, AS Macro, Cycles and Shocks, Aggregate Demand, Consumer Spending, Economic History, Teaching of Economics, 2011-01-25T07:31:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/consumption-graphic http://www.tutor2u.net/blog/index.php/economics/comments/consumption-graphic#When:13:53:00Z Good graphics on population and Consumption in January 2011’s National Geographic magazine. Opportunity for cross-curricular understanding. AS and A2 Specifications, OCR AS Economics Unit F582, AS Macro, Cycles and Shocks, Aggregate Demand, Consumer Spending, Demography, 2011-01-19T13:53:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/economics-qa-will-the-rise-in-vat-harm-the-uks-economic-performance http://www.tutor2u.net/blog/index.php/economics/comments/economics-qa-will-the-rise-in-vat-harm-the-uks-economic-performance#When:14:48:00Z On January 4th 2011, the standard rate of value added tax (VAT) jumped from 17.5% to 20%. For the first time, the UK VAT rate is now the same as the basic rate of income tax! Prime Minister David Cameron has stated publicly that the rise in VAT is likely to be permanent rather than temporary. The UK economy will thus have to adjust to this higher rate but what are some of the possible macroeconomic consequences? AS and A2 Specifications, AQA Economics Unit 2, AQA Economics Unit 4, EdExcel Economics Unit 2, EdExcel Economics Unit 4, Economics Q&A, Q&A - Macro, A2 Macro, AS Macro, Business Economics, Cycles and Shocks, Aggregate Demand, Government Intervention, Indirect Taxes, Macroeconomic Policies, Fiscal Policy, Teaching of Economics, UK Economy, Recession Watch, 2011-01-17T14:48:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/will-we-have-to-live-with-high-unemployment http://www.tutor2u.net/blog/index.php/economics/comments/will-we-have-to-live-with-high-unemployment#When:10:23:00Z Will many advanced economies have to live with a new semi-permanently higher level of unemployment as a consequence of the global financial crisis, economic slump and a period of fiscal austerity?   AS and A2 Specifications, AQA Economics Unit 4, EdExcel Economics Unit 4, A2 Macro, AS Macro, Cycles and Shocks, Aggregate Demand, Global Economy, Credit Crunch, Macroeconomic Policies, Fiscal Policy, Monetary Policy, OECD Economies, US Economy, Unemployment, 2011-01-17T10:23:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/economics-qa-will-the-government-spending-cuts-affect-inflation http://www.tutor2u.net/blog/index.php/economics/comments/economics-qa-will-the-government-spending-cuts-affect-inflation#When:17:49:00Z In early July 2010 Chancellor George Osborne announced a tough government spending review designed to cut the size of the UK’s structural budget deficit and bring down managed state sector spending as a share of GDP. The UK is not alone in introducing fiscal austerity measures and they have prompted fierce debate not least among economists about the likely impact on economic performance. The spending squeeze brings to an end more than a decade of strong real terms increases in state spending. This question is really about causation and in this case we are asked to think about how the steep planned cuts in government spending may affect the annual rate of consumer price inflation in the next couple of years. AS and A2 Specifications, AQA Economics Unit 2, AQA Economics Unit 4, EdExcel Economics Unit 2, EdExcel Economics Unit 4, Economics Q&A, Q&A - Macro, A2 Macro, AS Macro, Cycles and Shocks, Aggregate Demand, Inflation and Deflation, Macroeconomic Policies, Fiscal Policy, Teaching of Economics, UK Economy, 2011-01-03T17:49:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/a2-macro-revision-the-stock-cycle http://www.tutor2u.net/blog/index.php/economics/comments/a2-macro-revision-the-stock-cycle#When:19:29:00Z The stock cycle helps to explain changes in national output because nearly all businesses hold stocks of finished products or raw materials and components as a way of balancing changes in demand. AS and A2 Specifications, AQA Economics Unit 4, A2 Macro, Business Economics, Cycles and Shocks, Aggregate Demand, Capital Investment, UK Economy, 2010-12-31T19:29:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/external-shocks http://www.tutor2u.net/blog/index.php/economics/comments/external-shocks#When:09:31:00Z Some recent examples of external shocks, useful for classroom discussion on the economic effects of these on the economy (bearing in mind that external shocks can have positive and negative effects): Snow Shark attack in Sharm al-Sheikh  Fifa awarding Qatar French strikes Spanish strikes Iceland ash cloud AS and A2 Specifications, AQA Economics Unit 2, AQA Economics Unit 4, EdExcel Economics Unit 2, EdExcel Economics Unit 4, A2 Macro, AS Macro, Cycles and Shocks, Aggregate Demand, Aggregate Supply, Teaching of Economics, 2010-12-07T09:31:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/asia-rising-thai-car-exports-speeds-up-growth http://www.tutor2u.net/blog/index.php/economics/comments/asia-rising-thai-car-exports-speeds-up-growth#When:07:48:00Z One of my former students Alastair Leithead reports on the boom in car production in Thailand and the multiplier effects their export-oriented strategy is having on the Thai economy. Ford has invested hundreds of millions of dollars into expanding car manufacturing capacity in Thailand and Boots is a UK retailer that has seen the opportunities for boosting profits from inward investment. AS and A2 Specifications, AQA Economics Unit 2, AQA Economics Unit 4, EdExcel Economics Unit 2, EdExcel Economics Unit 4, A2 Macro, AS Macro, Emerging Economies, Development Economics, Cycles and Shocks, Aggregate Demand, Economic Growth, Global Economy, Teaching of Economics, 2010-10-27T07:48:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/video-resources-on-consumption-and-saving http://www.tutor2u.net/blog/index.php/economics/comments/video-resources-on-consumption-and-saving#When:08:00:00Z I am teaching the determinants of consumption and saving with my AS Macro group and have been putting together a set of short video news reports on factors such as taxation, consumer confidence, house prices, expectations, interest rates and unemployment. My selection of video resources is provided below. AS and A2 Specifications, AQA Economics Unit 2, EdExcel Economics Unit 2, AS Macro, Cycles and Shocks, Aggregate Demand, Consumer Spending, Saving, Macroeconomic Policies, Teaching of Economics, UK Economy, Credit Crunch, 2010-10-07T08:00:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/lesson-plan-for-introducing-changes-in-ad http://www.tutor2u.net/blog/index.php/economics/comments/lesson-plan-for-introducing-changes-in-ad#When:22:01:00Z Thought I would share a lesson that I felt went well today. Given that it is the time of year where we try and get pupils shifting and playing with curves, I hope it is of use to someone! Feel free to comment critically. I am really keen to hear from colleagues about how they get pupils working together to be more independent in their learning. AS and A2 Specifications, AQA Economics Unit 2, OCR AS Economics Unit F582, AS Macro, Cycles and Shocks, Aggregate Demand, Teaching of Economics, 2010-10-05T22:01:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/apple-amazon-and-the-multapplier-effect http://www.tutor2u.net/blog/index.php/economics/comments/apple-amazon-and-the-multapplier-effect#When:15:30:00Z With the Bank of England now considering further QE and also urging us all to empty our bank accounts and get out there and spend, spend, spend it got me thinking about the enabling effect of technology, in particular in the area of portable electronic devices. I did toy recently with buying an iPhone, but was struggling to justify the cost. I did however recently succumb to temptation and treated myself to a new 32G Apple Ipod Touch. A2 Micro, AS Micro, Cost Benefit Analysis, Cycles and Shocks, Aggregate Demand, Consumer Spending, Macroeconomic Policies, Monetary Policy, Market Equilibrium and Price, Elasticity of Demand, 2010-09-30T15:30:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/as-macro-circular-flow-questions-and-exercise http://www.tutor2u.net/blog/index.php/economics/comments/as-macro-circular-flow-questions-and-exercise#When:20:19:00Z Circular_Flow_Questions.docxThis is a short activity I have been using with my new AS macro group as we explore injections and leakages from the circular flow and the possible impact on the level of GDP. Download the worksheet Circular_Flow_Questions.docx AS and A2 Specifications, AQA Economics Unit 2, EdExcel Economics Unit 2, AS Macro, Cycles and Shocks, Aggregate Demand, Teaching of Economics, 2010-09-21T20:19:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/new-research-on-fiscal-multipliers http://www.tutor2u.net/blog/index.php/economics/comments/new-research-on-fiscal-multipliers#When:15:15:00Z The size of the fiscal multiplier may be larger in recessions than in expansions according to new research published here. A useful article to use when teaching macro policy responses at A2 level. Hat tip to Kevin Hinde for first flagging this up. AS and A2 Specifications, AQA Economics Unit 4, EdExcel Economics Unit 4, A2 Macro, Cycles and Shocks, Aggregate Demand, Global Economy, Credit Crunch, Macroeconomic Policies, Fiscal Policy, Teaching of Economics, UK Economy, 2010-09-05T15:15:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/consumer-sentiment-weakens-as-double-dip-looms http://www.tutor2u.net/blog/index.php/economics/comments/consumer-sentiment-weakens-as-double-dip-looms#When:07:44:00Z Swings in consumer confidence have often provided reliable evidence of short term turning points in economic activity. And there are growing fears of a double-dip recession for the UK with a raft of household surveys suggesting a weakening of sentiment about prospects for the economy. AS and A2 Specifications, AQA Economics Unit 2, EdExcel Economics Unit 2, A2 Macro, AS Macro, Cycles and Shocks, Aggregate Demand, Consumer Spending, UK Economy, Recession Watch, Credit Crunch, 2010-08-02T07:44:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/specific-supply-side-policies http://www.tutor2u.net/blog/index.php/economics/comments/specific-supply-side-policies#When:12:18:01Z Its always good to be able to refer to real economic policies when teaching supply side policies, rather than referring to them in the abstract, such as “increase real expenditure on R&D and education”. Here is a good current example of a supply side policy - the government last week began the long process of distributing its £200m UK Innovation Investment Fund (IIF), which will be focused on life sciences, digital and advanced manufacturing businesses. Lord Drayson, the science minister, also outlined plans to tackle the bureaucracy and red-tape that creates a log-jam for initial public offerings of high-tech companies, which have dried up in the last two years, creating problems for venture capital groups. AS and A2 Specifications, AQA Economics Unit 2, AQA Economics Unit 4, EdExcel Economics Unit 2, EdExcel Economics Unit 4, A2 Macro, AS Macro, Business Economics, Cycles and Shocks, Aggregate Demand, Capital Investment, Macroeconomic Policies, Supply-side policies, Teaching of Economics, UK Economy, 2010-06-05T12:18:01+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/as-macro-revision-household-saving http://www.tutor2u.net/blog/index.php/economics/comments/as-macro-revision-household-saving#When:07:46:00Z In this revision blog we look at the economic significance of household saving. Saving has become a huge macroeconomic issue in the UK in recent years. There was a trend decline in the savings ratio during the late 1990s and for most of this decade and many have seen this as one of the reasons why the economy was at such high risk during the credit crunch. According to a recent news report, Britain entered the financial crisis and recession with the lowest savings rate since the Second World War, the second lowest of all major economies.  The UK national household savings rate fell to a post-war low of -0.5% in January 2008. That compared with a peak of 13.4% in 1984. AS and A2 Specifications, AQA Economics Unit 2, EdExcel Economics Unit 2, AS Macro, Cycles and Shocks, Aggregate Demand, Saving, Macroeconomic Policies, Monetary Policy, UK Economy, 2010-05-30T07:46:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/as-macro-revision-consumer-borrowing http://www.tutor2u.net/blog/index.php/economics/comments/as-macro-revision-consumer-borrowing#When:06:59:00Z Most of us at some time need to borrow money to finance spending. From taking out a mortgage or using a student loan and making frequent use of bank credit cards, borrowing is a normal feature of life and not necessarily something to be worried about. What matters is whether building up debt is sustainable – in other words, can those who rely on debt pay it back? Huge levels of borrowing and an inevitable surge in household debt were features of the long period of growth that came to an end in 2008. Now the British economy is being held back by a historically high level of consumer debt - and you thought that it was the British government stuck in the deepest debt trap? AS and A2 Specifications, AQA Economics Unit 2, EdExcel Economics Unit 2, AS Macro, Cycles and Shocks, Aggregate Demand, Consumer Spending, UK Economy, Recession Watch, Credit Crunch, 2010-05-30T06:59:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/as-macro-revision-the-importance-of-consumption http://www.tutor2u.net/blog/index.php/economics/comments/as-macro-revision-the-importance-of-consumption#When:06:40:00Z Consumer spending on goods and services is the main driver of aggregate demand in the British economy. Over sixty five per cent of demand comes from the household sector and the strength or weakness of household spending has a major bearing on movements in the economic cycle. AS and A2 Specifications, AQA Economics Unit 2, EdExcel Economics Unit 2, AS Macro, Cycles and Shocks, Aggregate Demand, Consumer Spending, UK Economy, 2010-05-30T06:40:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/qa-what-do-we-need-to-know-about-output-gaps http://www.tutor2u.net/blog/index.php/economics/comments/qa-what-do-we-need-to-know-about-output-gaps#When:18:02:00Z Q&A: For AS macroeconomics, what do we need to know about output gaps? AS and A2 Specifications, AQA Economics Unit 2, EdExcel Economics Unit 2, Economics Q&A, Q&A - Macro, AS Macro, Cycles and Shocks, Aggregate Demand, UK Economy, Recession Watch, Credit Crunch, 2010-05-29T18:02:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/a2-economics-revision-changing-pattern-of-global-trade-investment http://www.tutor2u.net/blog/index.php/economics/comments/a2-economics-revision-changing-pattern-of-global-trade-investment#When:07:58:00Z This new streamed revision presentation guides students through some key evaluation points on the changing patterns in global trade & investment. Ideal for A2 revision. Revision Presentation on the Changing Pattern of Global Trade & Investment AS and A2 Specifications, AQA Economics Unit 4, EdExcel Economics Unit 4, OCR A2 Economics Unit F585, A2 Macro, Emerging Economies, Development Economics, Brazil Economy, China Economy, Indian economy, Russia Economy, Competition Policy, Cycles and Shocks, Aggregate Demand, Capital Investment, Consumer Spending, Saving, Global Economy, Credit Crunch, International Trade, OECD Economies, 2010-05-02T07:58:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/as-a2-revision-where-next-for-the-uk-economy http://www.tutor2u.net/blog/index.php/economics/comments/as-a2-revision-where-next-for-the-uk-economy#When:06:44:00Z Students wanting to demonstrate up-to-date understanding of the UK economy should find this streamed revision presentation really useful.  It was delivered by Geoff at our AS & A2 Economics workshops in London & Manchester.  It provides a comprehensive coverage of recent developments in the UK economy and highlights some potential downsides and upsides as the economy attempts to sustain a recovery during 2010 and 2011. Has the era of macro economic stability been replaced by a new phase of macro economic uncertainty, slower growth and a recovery constrained by debt? Or are there grounds for being more optimistic about the near-term future for the British economy? Revision Presentation on the UK Economy AS and A2 Specifications, AQA Economics Unit 2, AQA Economics Unit 4, EdExcel Economics Unit 2, EdExcel Economics Unit 4, OCR AS Economics Unit F582, A2 Macro, AS Macro, Cycles and Shocks, Aggregate Demand, Capital Investment, Consumer Spending, Saving, Aggregate Supply, Economic Growth, Exchange Rates, Inflation and Deflation, International Trade, Macroeconomic Policies, Fiscal Policy, Monetary Policy, Supply-side policies, Trade Policies, Keynesian Economics, Manufacturing Industry, Monetarism, UK Economy, Recession Watch, 2010-05-02T06:44:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/a2-economics-revision-from-budget-surplus-to-deficit http://www.tutor2u.net/blog/index.php/economics/comments/a2-economics-revision-from-budget-surplus-to-deficit#When:15:35:00Z Here is a suggested answer to this question: “Explain why a government budget might move from surplus to deficit” (15 marks) AS and A2 Specifications, AQA Economics Unit 4, EdExcel Economics Unit 4, OCR A2 Economics Unit F585, A2 Macro, Cycles and Shocks, Aggregate Demand, Macroeconomic Policies, Fiscal Policy, UK Economy, Credit Crunch, 2010-05-01T15:35:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/capacity-utilisation http://www.tutor2u.net/blog/index.php/economics/comments/capacity-utilisation#When:08:07:00Z Capacity utilisation is a macroeconomic term that is now commonly used in AS macro exam questions. It measures how much of the productive potential of the economy is being used at a given point in an economic cycle. Capacity utilisation falls during a recession because of falling aggregate demand for goods and services. The result is that scarce resources of land, labour and capital are not being used to their full extent. AS and A2 Specifications, AQA Economics Unit 2, AQA Economics Unit 4, EdExcel Economics Unit 2, EdExcel Economics Unit 4, OCR A2 Economics Unit F585, AS Macro, Cycles and Shocks, Aggregate Demand, Aggregate Supply, GCSE Economics, Macroeconomic Policies, Teaching of Economics, UK Economy, Recession Watch, 2010-04-25T08:07:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/animal-spirits http://www.tutor2u.net/blog/index.php/economics/comments/animal-spirits#When:07:52:00Z Animal spirits refers to the state of confidence or pessimism held by consumers and businesses. Expectations for the future inevitably influence decisions made today about how much consumers are prepared to spend or save and the willingness of businesses to commit funds towards capital investment in their chosen markets. AS and A2 Specifications, AQA Economics Unit 2, AQA Economics Unit 4, EdExcel Economics Unit 2, EdExcel Economics Unit 4, OCR A2 Economics Unit F585, A2 Macro, AS Macro, Behavioural Economics, Cycles and Shocks, Aggregate Demand, Capital Investment, Consumer Spending, Saving, Macroeconomic Policies, Keynesian Economics, Teaching of Economics, UK Economy, Recession Watch, 2010-04-25T07:52:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/broadband-and-economic-growth http://www.tutor2u.net/blog/index.php/economics/comments/broadband-and-economic-growth#When:14:52:00Z Investment in broadband capacity and speed has a strong impact on economic growth according to new research. A2 Macro, AS Macro, Cycles and Shocks, Aggregate Demand, Capital Investment, Economic Growth, Economics of Technology, International Trade, Macroeconomic Policies, Supply-side policies, OECD Economies, US Economy, 2010-04-03T14:52:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/foreign-investment-videos http://www.tutor2u.net/blog/index.php/economics/comments/foreign-investment-videos#When:07:59:00Z Videos produced by governments seeking foreign direct investment can be a useful teaching aid when studying the drivers of FDI. A2 Macro, AS Macro, Emerging Economies, Cycles and Shocks, Aggregate Demand, Capital Investment, Economic Growth, European Economy, EU Enlargement, Teaching of Economics, 2010-04-02T07:59:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/end-of-the-road-for-the-car-scrappage-scheme http://www.tutor2u.net/blog/index.php/economics/comments/end-of-the-road-for-the-car-scrappage-scheme#When:18:48:00Z Today marks the end of the UK government’s car scrappage scheme. The scheme offered drivers of cars at least 10 years old £2,000 off the price of a new vehicle with half of the money is paid by the government and half by the carmaker in question. Over the course of the scheme is estimated that the scrappage initiative has been responsible for about a fifth of all new UK car registrations.  And there seems little doubt that the consumer subsidy has provided a shot in the arm for a car industry affected badly by the global financial crisis and subsequent recession. Paul Everitt, chief executive of the Society of Motor Manufacturers and Traders is quoted as saying that it had provided a “much-needed stimulus for the UK motor industry”. A2 Micro, AS Micro, Business Economics, Cycles and Shocks, Aggregate Demand, Consumer Spending, Government Intervention, Subsidies, Macroeconomic Policies, Manufacturing Industry, Market Equilibrium and Price, Nature of Demand, Teaching of Economics, OCR F585 Economics, Transport Economics, UK Economy, Credit Crunch, 2010-03-31T18:48:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/nissan-turns-over-a-new-leaf http://www.tutor2u.net/blog/index.php/economics/comments/nissan-turns-over-a-new-leaf#When:12:14:00Z This is a hugely important announcement and boost for the North east economy whose long term future must be built on competitive advantages in the emerging low-carbon industries of tomorrow. The decision to manufacture the lithium-iron batteries used in the Leaf electric cars is the key to the employment creation effects of the new investment by Nissan. Note too the role played by government financial support. The investment is backed by a £20.7m government grant and up to £220m from the European Investment Bank. The Nissan car plant is the most productive in the European Union. The plant opened in 1984 and has so far built 5.6 million cars. It produced a third of all cars built in Britain in 2009.  Digby Jones sings the praises of businesses such as Nissan in this super interview on the Politics programme a few days ago. A2 Macro, AS Macro, Business Economics, Cycles and Shocks, Aggregate Demand, Capital Investment, Economic Growth, European Economy, GCSE Economics, Government Intervention, Subsidies, Manufacturing Industry, OECD Economies, Teaching of Economics, Transport Economics, UK Economy, Regional Economics, Recession Watch, Unemployment, 2010-03-18T12:14:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/pigs-or-brics-which-is-most-important-for-uk-exports-this-year http://www.tutor2u.net/blog/index.php/economics/comments/pigs-or-brics-which-is-most-important-for-uk-exports-this-year#When:10:28:00Z The PIGS - Portugal, Italy, Greece and Spain - are in economic turmoil and likely to experience weak growth in the near term. A contrast to the BRICs - Brazil, Russia, India and China - three of whom are already seeing a ramping up of their growth rates as the world economic cycle turns. But which group is more important for the UK export sector? Chris Giles from the Financial Times has the answer here and his blog provides a useful evaluation point for AS and A2 macroeconomics students. A2 Macro, AS Macro, Emerging Economies, Brazil Economy, China Economy, Indian economy, Russia Economy, Cycles and Shocks, Aggregate Demand, European Economy, Teaching of Economics, UK Economy, Recession Watch, 2010-03-18T10:28:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/wen-turns-the-tables http://www.tutor2u.net/blog/index.php/economics/comments/wen-turns-the-tables#When:21:43:00Z Following on from last month’s article in EconoMAX that I wrote, China has insisted again today that the yuan is not undervalued - The Chinese premier turned the tables on the U.S and Europe today when it said that putting pressure on China to appreciate its currency was tantamount to protectionism!! Genius! “What I don’t understand is depreciating one’s own currency, and attempting to pressure others to appreciate, for the purpose of increasing exports. In my view, that is protectionism,” Mr Wen said. A2 Macro, Emerging Economies, China Economy, Cycles and Shocks, Aggregate Demand, Economic Growth, Exchange Rates, Macroeconomic Policies, Trade Policies, Teaching of Economics, 2010-03-14T21:43:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/india-ramps-up-infrastructure-spending-to-sustain-growth http://www.tutor2u.net/blog/index.php/economics/comments/india-ramps-up-infrastructure-spending-to-sustain-growth#When:11:00:00Z Rapid growth has put India’s creaking infrastructure under tremendous pressure. The Indian government has sharply increased investment spending on infrastructure with ambitious projects such as adding 20km of new roads each day! Can the spending projects deliver? This BBC India Business Report looks at the rise in investment spending. A2 Macro, AS Macro, Emerging Economies, Indian economy, Cycles and Shocks, Aggregate Demand, Capital Investment, Economic Growth, Global Economy, Macroeconomic Policies, Fiscal Policy, Teaching of Economics, 2010-03-14T11:00:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/update-on-the-greek-tragedy http://www.tutor2u.net/blog/index.php/economics/comments/update-on-the-greek-tragedy#When:17:49:00Z A2 Macro, AS Macro, Cycles and Shocks, Aggregate Demand, Economic Growth, Financial Markets, Global Economy, IMF, Credit Crunch, Macroeconomic Policies, Fiscal Policy, 2010-03-04T17:49:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/withdrawing-the-drugs http://www.tutor2u.net/blog/index.php/economics/comments/withdrawing-the-drugs#When:17:58:00Z An excellent article in last week’s Economist magazine, which focuses on the difficult task of weaning the world economy off its fiscal and monetary stimulus. In recent years, Interest rates have plummeted, and budget deficits soared; whilst quantitative easing has come out the woodwork; but last week’s announcement that the Fed raised the discount rate in its first step of contractionary policy in quite some time as well as our own general election around the corner, where fiscal prudence is high on the agenda and it seems that the beginning of the next phase in economic policy has begun. A2 Macro, AS Macro, Cycles and Shocks, Aggregate Demand, Economic Growth, Government Intervention, Macroeconomic Policies, Fiscal Policy, Monetary Policy, Supply-side policies, Keynesian Economics, 2010-02-23T17:58:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/margins-and-risk-the-spiralling-cost-of-credit http://www.tutor2u.net/blog/index.php/economics/comments/margins-and-risk-the-spiralling-cost-of-credit#When:15:49:00Z There has never been a strong link between the policy rate decisions of the Bank of England and the interest rates charged to customers who take out unsecured loans using their credit cards. But withbase rates at 0.5% and lilkely to remain well below their neutral rate for some time to come, the chasm between this and the average of 18-19 per cent annual rate on unpaid credit card balances has rarely been wider. The lenders claim that rising debt default levels from borrowers suffering from the recession and rising unemployment has increased the risks of loans and that higher rates are the inevitable result of this. Consumer watchdogs take a less benign view and argue that the financial companies are exploiting consumers and whacking up their profit margins even during these difficult times. This BBC news video from Brian Milligan provides food for thought on the credit card issue and makes a good resource to use when teaching monetary policy and personal finance. The BBC Radio 4 Today programme also covered this issue during the week. A2 Macro, AS Macro, Cycles and Shocks, Aggregate Demand, Consumer Spending, Financial Markets, GCSE Economics, Teaching of Economics, UK Economy, Recession Watch, Credit Crunch, 2010-02-20T15:49:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/supply-side-stimulus-for-the-chinese-economy http://www.tutor2u.net/blog/index.php/economics/comments/supply-side-stimulus-for-the-chinese-economy#When:11:53:00Z A top-down programme to encourage bottom-up growth of entrepreneurship in China’s rural areas. We have become accustomed to the enormous size of infrastructure projects in China designed to maintain domestic demand and employment and sustain a minimum growth rate of 8 per cent. China’s investments in new factories and properties surged 67 percent last year to 15.2 trillion yuan, more than Russia’s gross domestic product. This is another approach focusing on enterprise in rural areas. The Chinese Government has spent about $40 billion training people from the countryside to run their own business. The Government’s scheme provides free skills training, tax free loans of up to $8,000 and two years of support.   A2 Macro, AS Macro, Emerging Economies, China Economy, Cycles and Shocks, Aggregate Demand, Capital Investment, Aggregate Supply, Economic Growth, Global Economy, Macroeconomic Policies, Supply-side policies, Teaching of Economics, 2010-02-17T11:53:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/economists-call-for-a-fiscal-tightening http://www.tutor2u.net/blog/index.php/economics/comments/economists-call-for-a-fiscal-tightening#When:15:10:00Z A group of leading economists has written to the Sunday Times stressing the need for a credible and timely start to reducing the UK government’s fiscal deficit. The letter can be found here.. Among the letter’s signatories are Kenneth Rogoff, a former chief economist at the International Monetary Fund; Howard Davies, director of the London School of Economics and former head of the Financial Services Authority; and Roger Bootle, former chief economist at HSBC There is plenty of interest and significance here for A2 students “The bulk of this fiscal consolidation should be borne by reductions in government spending, but that process should be mindful of its impact on society’s more vulnerable groups. Tax increases should be broad-based and minimise damaging increases in marginal tax rates on employment and investment” 1/ What is a structural budget deficit? 2/ Why do the economists favour cuts in government spending over higher taxes? 3/ Can you think of broadly-based tax increases that might be introduced? 4/ Why are the economists concerned about the impact of higher marginal tax rates on employment and investment? More here from the BBC: Economists urge swift action to reduce budget deficit   A2 Macro, Cycles and Shocks, Aggregate Demand, Macroeconomic Policies, Fiscal Policy, Teaching of Economics, UK Economy, 2010-02-14T15:10:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/mervyn-king-on-tailwinds-and-headwinds http://www.tutor2u.net/blog/index.php/economics/comments/mervyn-king-on-tailwinds-and-headwinds#When:16:39:00Z Mervyn King delivers the latest Inflation Report from the Bank of England and focuses on the strength of two forces: 1/ The tailwind of the policy stimulus from monetary and fiscal policy 2/ The headwind of the continued deleveraging in the financial system It is a good analogy to use and one that students should be able to latch onto as they grapple with their macroeconomics. This BBC news video provides a good overview of the Bank’s current thinking.  In it the Governor explains why the Bank will - for the third time - expects to write to the Chancellor to explain an inflation overshoot. And he comes out with a good quote “Monetary policy can do little to affect short-term changes in inflation” ....... instead it has more leverage on the growth of total spending in the economy which (relative to the supply-side capacity of the economy) affects demand-pull inflationary pressures during the economic cycle. A2 Macro, AS Macro, Cycles and Shocks, Aggregate Demand, Inflation and Deflation, Macroeconomic Policies, Monetary Policy, Teaching of Economics, UK Economy, Recession Watch, Credit Crunch, 2010-02-10T16:39:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/revision-presentation-a-question-of-confidence http://www.tutor2u.net/blog/index.php/economics/comments/revision-presentation-a-question-of-confidence#When:07:23:00Z This new revision presentation examines the implications of changes in consumer and business confidence for the UK economy Launch revision presentation on a Question of Confidence Download printable slide handouts Cycles and Shocks, Aggregate Demand, Capital Investment, Consumer Spending, Macroeconomic Policies, Supply-side policies, UK Economy, Recession Watch, 2010-01-29T07:23:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/focus-on-the-brics http://www.tutor2u.net/blog/index.php/economics/comments/focus-on-the-brics#When:17:04:00Z The following video clips from the FT focus on the so-called BRIC economies (coined by the Chief Economist at Goldman Sachs in 2001). There are excellent to provide discussion points on why grouping the BRIC (Brazil, Russia, India, China) economies together is flawed,  with the 4 countries being actually very different and the acronym BRIC no longer being appropriate, in its description of their experiences or their futures. They also discuss whether economic power has shifted from the US to the East. A2 Macro, Emerging Economies, Development Economics, Brazil Economy, China Economy, Indian economy, Russia Economy, Commodities Markets, Cycles and Shocks, Aggregate Demand, Consumer Spending, Saving, Economic Growth, Macroeconomic Policies, Credit Crunch, 2010-01-21T17:04:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/unemployment-falls-but-who-deserves-the-credit http://www.tutor2u.net/blog/index.php/economics/comments/unemployment-falls-but-who-deserves-the-credit#When:15:04:00Z Stephanie Flanders on top form here, discussing who deserves the credit for the recent surprise fall in unemployment figures announced this week. A2 Macro, AS Macro, Cycles and Shocks, Aggregate Demand, Economic Growth, Labour Market, UK Economy, Unemployment, 2010-01-21T15:04:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/fly-in-the-ointment-for-export-led-growth http://www.tutor2u.net/blog/index.php/economics/comments/fly-in-the-ointment-for-export-led-growth#When:07:22:00Z David Smith’s weekly Economic Outlook in the Sunday Times focuses on the prospect that recovery from the recession will come from exports. He suggests that the conditions needed are in place – sterling is a significantly more competitive currency than was the case 18 months ago, there is strong recovery in world trade which is likely to last into 2011, and there is no wage inflation to spoil the competitiveness of UK export prices. The Ernst and Young Item club’s predictions for the economy over the next ten years, to be published today but much trailed through the media this weekend, will suggest that although the domestic economy will struggle to produce enough consumer demand to stimulate growth - debt-laden consumers have to recover from the shock of repaying some of their borrowing before they are prepared to spend so heavily again – growth in exports will be strong, with figures of 9%, 9.5% and 8% growth predicted for 2011 to 2014. If consumption is indeed sluggish at the same time, we can hope that imports will not be growing as fast, so that the figure for net exports improves, allowing Aggregate Demand to grow and some recovery of output to become established. A2 Macro, Balance of Payments, Cycles and Shocks, Aggregate Demand, Global Economy, Macroeconomic Policies, Trade Policies, UK Economy, Recession Watch, Unemployment, 2010-01-18T07:22:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/hundreds-of-jobs-lost-as-bosch-moves-from-wales-to-hungary http://www.tutor2u.net/blog/index.php/economics/comments/hundreds-of-jobs-lost-as-bosch-moves-from-wales-to-hungary#When:09:42:00Z The Bosch Group - a privately owned German multinational manufacturing business has announced the closure of it’s car parts factory in south Wales with the loss of hundreds of jobs. With 900 jobs going at the factory itself, the final scale of extra unemployment will be significantly higher because of the negative multiplier effects for the local and regional economy. A2 Macro, AS Macro, Business Economics, Economies of Scale, Cycles and Shocks, Aggregate Demand, European Economy, The Euro, Market Failure, Factor Immobility, OECD Economies, German Economy, Teaching of Economics, UK Economy, Recession Watch, Unemployment, 2010-01-15T09:42:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/cautious-consumers-fear-tax-rises http://www.tutor2u.net/blog/index.php/economics/comments/cautious-consumers-fear-tax-rises#When:10:40:00Z Consumer spending is the main short term driver of demand in the British economy so the expectations and confidence levels within the household sector will be pivotal in determing the speed of any revival in demand during 2010. The latest Nationwide Building Society consumer confidence index recorded a five point decrease in December to 69 – its biggest fall since November 2008. It seems that people are worried about being hit by higher tax burdens this year as the fiscal squeeze looms on the horizon. Higher VAT (back now to 17.5% and rumoured to be rising to 20% later in the year) and increases in national insurance contributions may be the tip of an ill-concealed fiscal iceberg. House prices are rising and unemployment is rising at a slower rate than feared a year ago. But real disposable income is the dominant factor that determines how much we can spend and the prospects for 2010 do not look good. AS Macro, Cycles and Shocks, Aggregate Demand, Consumer Spending, UK Economy, Recession Watch, 2010-01-06T10:40:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/is-uk-manufacturing-turning-a-corner http://www.tutor2u.net/blog/index.php/economics/comments/is-uk-manufacturing-turning-a-corner#When:18:47:00Z Whisper it quietly but there are signs of a rebound in orders and production in UK manufacturing industry. In recent weeks we have seen a cluster of articles suggesting that some of the industrial production that left the UK during an age of out-sourcing is now starting to return home. Having plunged last year manufacturing output appears to have stabilised and today we heard news from the Chartered Institute of Purchasing & Supply’s purchasing managers’ index that UK manufacturing activity grew at its fastest pace in more than two years in December 2009. Last week, a survey by the Engineering Employers Federation revealed that one in seven British companies had repatriated manufacturing operations to the UK in the past two years. Keep in mind that manufacturing contributes less than 12% of UK GDP - although many service sector jobs and businesses depend directly on the health of the industrial sector. Manufacturing may be making a comeback because of: 1/ Sterling: The weaker value of sterling against the Euro and the US dollar has given manufacturing industry a competitive boost 2/ Relative costs and supply issues: Higher than expected costs and quality problems have been cited by some businesses that have outsourced some manufacturing - high wage inflation in fast-growing emerging market countries has narrowed some of the unit labour cost gap between the UK and rivals 3/ Oil and transport costs: The high price of oil has increased the cost of shipping goods around the world encouraging producers to focus output closer to the market 4/ Overseas markets: Signs of a recovery in some of the UK’s main export markets - the majority of manufacturing production in the UK is exported, manufacturing industry in Britain is sensitive to the global economic cycle Sunday Times (3rd Jan) Made in Britain: How manufacturing is returning to the UK Scotsman: 15% of British firms switching production back to UK A2 Macro, AS Macro, Business Economics, Cycles and Shocks, Aggregate Demand, Capital Investment, Manufacturing Industry, OECD Economies, Teaching of Economics, UK Economy, 2010-01-04T18:47:00+00:00