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/the-story-of-adam-sugar-aka-aggregate-supply http://www.tutor2u.net/blog/index.php/economics/comments/the-story-of-adam-sugar-aka-aggregate-supply#When:16:05:29Z This is a great activity my HoD Luke McIlvenna did today with our mutual Lower Sixth Economics Class, which helped them to develop and demonstrate their understanding of aggregate supply. AS Macro, Cycles and Shocks, Aggregate Supply, 2012-02-10T16:05:29+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/unit-4-macro-focus-on-india-worlds-cheapest-computer http://www.tutor2u.net/blog/index.php/economics/comments/unit-4-macro-focus-on-india-worlds-cheapest-computer#When:20:29:20Z A few weeks ago came the announcement that an Indian business is finally set to launch the World’s cheapest tablet computer. This laptop device will sell for around 18 times less than the price of an iPad in London! How can a laptop be manufactured for less than $US 40? AS and A2 Specifications, AQA Economics Unit 4, EdExcel Economics Unit 4, OCR A2 Economics Unit F585, A2 Macro, Emerging Economies, Indian economy, Business Economics, Economies of Scale, Cycles and Shocks, Aggregate Supply, Economic Growth, Economics of Technology, Global Economy, International Trade, Market Equilibrium and Price, Nature of Supply, 2012-01-26T20:29:20+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/unit-4-macro-focus-on-india-supply-side-issues http://www.tutor2u.net/blog/index.php/economics/comments/unit-4-macro-focus-on-india-supply-side-issues#When:19:15:32Z The rapid growth of the India economy has been helped by her economy enjoying a number of supply-side advantages. That said there remain structural supply-side weaknesses that will limit her continued competitiveness and development. This blog looks at the plusses and the minuses. 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, Emerging Economies, Development Economics, Indian economy, Cycles and Shocks, Aggregate Supply, Economic Growth, Global Economy, Health Economics, Macroeconomic Policies, Supply-side policies, Teaching of Economics, 2012-01-25T19:15:32+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/unit-3-micro-3d-printing-and-a-manufacturing-revolution http://www.tutor2u.net/blog/index.php/economics/comments/unit-3-micro-3d-printing-and-a-manufacturing-revolution#When:16:56:38Z Additive manufacturing or 3D printing is an emerging technology that takes product design data which provides a geometric representation of a product such as a pen and that data is then sent over to a machine that allows products to be manufactured ‘on the spot’ typically using additive materials in liquid or powder format. This TED talk from Lisa Harouni (co-founder of Digital Forming) looks at examples of intricately designed products made using this new and increasingly affordable manufacturing technology. 3D machines can build structures, build replacement parts and parts within parts - the detailed resolution possible is incredible. AS and A2 Specifications, AQA Economics Unit 3, EdExcel Economics Unit 3, A2 Micro, AS Micro, Business Economics, Economies of Scale, Management Issues, Cycles and Shocks, Aggregate Supply, Economic Growth, Economics of Technology, Environmental Economics, Manufacturing Industry, Market Equilibrium and Price, Nature of Supply, Teaching of Economics, 2012-01-23T16:56:38+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/unit-2-macro-population-shift-in-china http://www.tutor2u.net/blog/index.php/economics/comments/unit-2-macro-population-shift-in-china#When:16:27:44Z What happened in the UK in 1851, the United States in 1920 and in the World in 2008? These three years mark the estimated year when the size of a given urban population overtook the size of the rural population. And now China has reached this significant landmark. The Chinese Bureau for National Statistics reported recently that in 2011, the proportion of urban population reached 51.27 percent (1.3% higher than in 2010) with the urban population standing at 690.79 million persons, an increase of 21 million persons in a year. China’s rural population stood at 656.56 million persons and for the first time her urban population was 34.23 million persons more than the rural population. Click below for some study / teaching resources: AS and A2 Specifications, AQA Economics Unit 2, EdExcel Economics Unit 2, AS Macro, Emerging Economies, Development Economics, China Economy, Cycles and Shocks, Aggregate Supply, Demography, Economic Growth, Global Economy, Poverty and Inequality, Standard of Living, 2012-01-23T16:27:44+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/unit-4-macro-natural-disasters-and-their-economic-impact http://www.tutor2u.net/blog/index.php/economics/comments/unit-4-macro-natural-disasters-and-their-economic-impact#When:23:57:42Z From tsunamis to tornadoes, from droughts to floods, 2011 was a particularly nasty year for natural disasters in many parts of the world. These natural disasters inevitably have demand and supply side effects affecting not just those countries affected but ripple impact across regions and in the broader global economy. The Al Jazeera news video report below provides a clear overview of some of the major natural climatic shocks of 2011 and could easily be used as an introductory resource to discuss what are some of the micro and macroeconomic effects in both the short and medium term. These include: * Effects on the stock of physical capital / infrastructure * Impact on a country’s human capital * Effects on commodity prices, export revenues * Effects on agricultural output, profits, investment, productivity * Ripple effects on manufacturing industries and energy supply/cost * Impact on state tax revenues and the costs of re-building and providing emergency financial support * Effect on the movement of population following extreme climatic events * Natural disasters and changes in the distribution of income / risk of poverty This Economist graphic (published in Jan 2012) looks at the human cost of natural disasters and claims that “the world has succeeded in making natural disasters less deadly.” 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, Agriculture, Emerging Economies, Cycles and Shocks, Aggregate Supply, Economic Growth, Environmental Economics, Global Economy, Government Intervention, Market Equilibrium and Price, Price Volatility, Teaching of Economics, 2012-01-07T23:57:42+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/unit-4-macro-india-the-road-ahead http://www.tutor2u.net/blog/index.php/economics/comments/unit-4-macro-india-the-road-ahead#When:13:13:11Z Here is a short 12 minute video on prospects for the India economy produced by economists at the International Monetary Fund. It covers some of the key current issues including high inflation in a supply-constrained economy, partial progress in reducing poverty and the impact that poor infrastructure has as a constraint on further growth and development. Click on the video link below AS and A2 Specifications, AQA Economics Unit 4, EdExcel Economics Unit 4, OCR A2 Economics Unit F585, A2 Macro, AS Macro, Emerging Economies, Indian economy, Cycles and Shocks, Aggregate Supply, Demography, Economic Growth, Global Economy, IMF, Teaching of Economics, 2011-12-07T13:13:11+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/unit-2-macro-will-a-youth-jobs-subsidy-work http://www.tutor2u.net/blog/index.php/economics/comments/unit-2-macro-will-a-youth-jobs-subsidy-work#When:11:03:38Z The Coalition Government recently heralded a new scheme designed to address the structural problem of high youth unemployment in the UK economy. Under their “youth contract” plan, employers will be given “wage incentives” worth £2,275 to take on some 160,000 18-to-24-year-olds. But will it have much impact on the problem? The independent Office for Budgetary Responsibility says that the net effect on overall unemployment will be close to zero, because the subsidy incentive will lead to a switch in employment away from older workers. AS and A2 Specifications, AQA Economics Unit 2, EdExcel Economics Unit 2, A2 Macro, AS Macro, Business Economics, Cycles and Shocks, Aggregate Supply, Government Intervention, Subsidies, Labour Market, Macroeconomic Policies, Supply-side policies, Teaching of Economics, UK Economy, Unemployment, 2011-11-30T11:03:38+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-a-widening-regional-divide-in-life-expectancy http://www.tutor2u.net/blog/index.php/economics/comments/unit-2-macro-a-widening-regional-divide-in-life-expectancy#When:17:23:20Z Life expectancy in the United Kingdom continues to improve. But one important aspect of the deep and structural divide in incomes, economic activity and status and health across different groups in Britain is the marked variation in average life expectancy for men and women. The UK Statistics Commission has just published new data on this covering the period 2004-2010 and finds that: AS and A2 Specifications, AQA Economics Unit 2, EdExcel Economics Unit 2, A2 Macro, AS Macro, Cycles and Shocks, Aggregate Supply, Demography, GCSE Economics, Health Economics, Poverty and Inequality, Standard of Living, Teaching of Economics, UK Economy, Regional Economics, Unemployment, 2011-10-19T17:23:20+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/as-macro-key-term-spare-capacity http://www.tutor2u.net/blog/index.php/economics/comments/as-macro-key-term-spare-capacity#When:21:22:00Z Spare capacity measures the extent to which an industry, or economy is operating below the maximum sustainable level of production - there are spare factor resources of land, labour and capital. There are many measures of capacity utilisation including surveys of business activity, the estimated output gap and the rate of unemployment in the labour market. AS and A2 Specifications, AQA Economics Unit 2, EdExcel Economics Unit 2, AS Macro, Business Economics, Cycles and Shocks, Aggregate Supply, Economic Growth, Macroeconomic Policies, Manufacturing Industry, 2011-05-23T21:22:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/revision-the-output-gap http://www.tutor2u.net/blog/index.php/economics/comments/revision-the-output-gap#When:08:39:01Z How much spare capacity does an economy have to meet a rise in demand? How close is an economy to operating at its productive potential? Has the recession damaged the economy’s productive potential? These sorts of questions all link to an important concept – the output gap. The output gap is the difference between the actual level of national output and its potential level and is usually expressed as a percentage of the level of potential output. AS and A2 Specifications, AQA Economics Unit 2, EdExcel Economics Unit 2, A2 Macro, AS Macro, Cycles and Shocks, Aggregate Supply, Macroeconomic Policies, UK Economy, Unemployment, 2011-05-23T08:39:01+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/as-macro-key-term-brain-drain http://www.tutor2u.net/blog/index.php/economics/comments/as-macro-key-term-brain-drain#When:15:20:01Z A brain drain is a term that describes the movement of highly skilled or professional people from their own country to another country where they can earn more money. It has been used to describe net outward migration of people from several European Union countries in recent times (notably Ireland, Greece and Spain) - another phrase for this is human capital flight. A sizeable brain drain can bring economic costs and benefits for the sending nation. One disadvantage is that countries lose out on the benefits that might have accrued from the resources used in educating people who leave. Add to this the loss of tax revenue from those who choose to live and work overseas. A sizeable loss of skilled workers (many of whom may be younger and therefore more geographically mobile) could lead to labour shortages in the sender country, putting upward pressure on wages and labour costs. Some of this income earned overseas returns to the sender country in the form of remittances (adding to GNP) and many skilled migrants often leave only for a year or two - the percentage of permanent migration inside the EU is relatively small. AS and A2 Specifications, AQA Economics Unit 2, EdExcel Economics Unit 2, AS Macro, Cycles and Shocks, Aggregate Supply, Demography, Labour Market, Macroeconomic Policies, Supply-side policies, 2011-05-22T15:20:01+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/a2-macro-chinese-investment-in-the-eu http://www.tutor2u.net/blog/index.php/economics/comments/a2-macro-chinese-investment-in-the-eu#When:13:23:00Z There is much focus on Chinese foreign direct investment in Africa and Latin America - China is also making huge investments in Australia as my friend Mark Johnston writes about in this blog. Here Euro News looks at investment in the European Union by Chinese owned businesses. New motorways in Poland ahead of the 2012 European Football Championships, co-financed by the EU, are being built by Chinese companies. The Chinese are also buying up public debt, in Greece, Spain and Portugal. AS and A2 Specifications, AQA Economics Unit 4, EdExcel Economics Unit 4, A2 Macro, Emerging Economies, China Economy, Cycles and Shocks, Aggregate Supply, Economic Growth, European Economy, EU Enlargement, Single Market, Global Economy, Macroeconomic Policies, Supply-side policies, OECD Economies, Poland, Teaching of Economics, 2011-05-03T13:23:00+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/the-economic-social-benefits-of-migration http://www.tutor2u.net/blog/index.php/economics/comments/the-economic-social-benefits-of-migration#When:19:56:00Z My own students know that I am strongly in favour of open migration and oppose the government’s attempts to impose artificial caps on economic migrants from outside of the EU. A hat tip to Philippe Legrain for spotting this article from today’s Guardian which is heavily tilted towards the longer-term economic and social benefits of migrants for the UK economy. So David Cameron wants to talk about immigration? Bring it on As a partial counter-balance perhaps I should link you towards a piece in the Daily Mail by Andrew Green: Why is the BBC STILL so hideously biased on immigration?  I have also linked below to some of our recent blogs on the migration issue. And here is a link to a presentation on the enlargement of the EU that I gave in London back in February 2011. 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 Supply, European Economy, EU Enlargement, Labour Market, Standard of Living, Teaching of Economics, UK Economy, 2011-04-16T19:56:00+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/patent-box-or-innovation-box-as-innovation-stimulant http://www.tutor2u.net/blog/index.php/economics/comments/patent-box-or-innovation-box-as-innovation-stimulant#When:19:54:00Z The UK coalition government does not yet have a growth strategy worth the name but they have invested plenty of capital in the idea of a Patent Box. This involves a lower corporation tax on profits drawn from patented products) and is a supply-side policy to make UK an attractive location for innovative industries. One proposal is that royalties and other profits from patented products and technologies would be taxed at just 10 per cent. But many economists argue that this is at best an ineffective way of lifting the amount of research and development in the British economy. They look instead to the Netherlands where an Innovation Box has had a significant impact - it reflects the view that patents are only a small part of the innovation process - you dont necessarily have to patent an idea to make small scale innovations commercially viable. Channel 4 news tonight visited Sandwich in Kent where the Pfizer research and development facility is set to close. 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 Supply, Economic Growth, Economics of Technology, Government Intervention, Subsidies, Macroeconomic Policies, Supply-side policies, Manufacturing Industry, Teaching of Economics, UK Economy, 2011-03-02T19:54:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/economic-growth-presentation http://www.tutor2u.net/blog/index.php/economics/comments/economic-growth-presentation#When:14:11:00Z Here is a streamed version of my notes from the LSE presentation last night on “Where is economic growth going to come from”? PDF Handout available here A copy of Professor John van Reenen’s powerpoint presentation is available to download. Download ‘Where is Future Growth Going to Come From?’ 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 Supply, Economic Growth, Macroeconomic Policies, Supply-side policies, Teaching of Economics, UK Economy, 2011-02-18T14:11:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/china-and-africa-resources-on-their-relatioinship http://www.tutor2u.net/blog/index.php/economics/comments/china-and-africa-resources-on-their-relatioinship#When:10:15:00Z The deepening economic ties between China and the continent of Africa is a hot topic in the globalisation debate and one that has been covered in a two part series on the BBC by Justin Rowlatt. Details here. Episode 1 / Episode 2 More programme information can be found here. Diane Coyle has a revealing blog post on the subtleties of this relationship in this blog post where she reviews the new book The Dragon’s Gift. For visual learners this photo archive from the BBC is superb! Here are some more recent news stories on this topic: China Foreign Minister Yang Jiechi in Zimbabwe visit (BBC) China-Africa trade set to keep on booming in 2011 (BBC) Poverty and Development: Africa-China relations mutually beneficial (Tutor2u Politics Blog)     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, Emerging Economies, Development Economics, China Economy, Cycles and Shocks, Aggregate Supply, Economic Growth, Global Economy, International Trade, Standard of Living, Teaching of Economics, 2011-02-14T10:15:00+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/an-aggregate-supply-puzzle http://www.tutor2u.net/blog/index.php/economics/comments/an-aggregate-supply-puzzle#When:07:07:00Z A rather fascinating debate has been raging in my department office since we returned from the Christmas holidays. Surprisingly, it doesn’t concern the ‘big news’ items such as the VAT rise or the government’s austerity measures, but instead we seem to have found a bit of a theoretical conundrum. The debate started as a result of a puzzling entry in the original AQA Unit 2 specification, which stated that candidates must have an understanding of the Keynesian LRAS curve. To our relief, this has been updated to just ‘an understanding of the Keynesian AS curve’, although candidates (unlike for any of the other major exam boards) must still use both the ‘classical’ upwards sloping SRAS and vertical LRAS, as well. Our conundrum deepened when we started to think about representing output gaps using the AD/AS framework, and it is this part of the puzzle that we think would benefit from input from the readers of this blog. AS and A2 Specifications, AQA Economics Unit 2, AQA Economics Unit 4, A2 Macro, AS Macro, Cycles and Shocks, Aggregate Supply, Teaching of Economics, 2011-01-24T07:07:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/tacit-collusion-between-oil-producers-and-consumers http://www.tutor2u.net/blog/index.php/economics/comments/tacit-collusion-between-oil-producers-and-consumers#When:11:25:00Z Are crude oil prices set to rise above $100 a barrel and stay there as we head into 2011? As our chart shows, there has been a steady increase in world oil prices over the last two years and a barrel of oil is now comfortably above $90. World economic growth is picking up - the main driver is strong activity in fast-growing emerging nations - and the oil producer cartel OPEC has announced that it sees no need to increase their output quotas in a way to stabilise the price below $90. AS and A2 Specifications, AQA Economics Unit 1, AS Macro, AS Micro, Emerging Economies, Cycles and Shocks, Aggregate Supply, Global Economy, Oil and Gas, Teaching of Economics, UK Economy, 2010-12-12T11:25:00+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/apprenticeships-for-a-silver-generation http://www.tutor2u.net/blog/index.php/economics/comments/apprenticeships-for-a-silver-generation#When:19:47:00Z The oldest contestant in the new (6th) series of The Apprentice is thirty one! But why should apprentices be concentrated only among those in the early stages of their careers? The number of people aged fifty and over who are applying for and winning places on apprenticeship schemes has more than doubled in the last few years as this BBC news video explains. Apprenticeship programmes for older workers challenges our common preconceptions about their place in the labour market - and this is a good thing as the debate continues about how best to support and encourage people to stay in work during these challenging economic times. Lifelong learning is not merely a vaccuous slogan - it has a real meaning and is hugely important for the British economy in the years ahead. This video reinforces the importance of human capital, the need for flexible skills to avoid structural unemployment. And it raises questions about who should and who can fund apprenticeship schemes and their longer-term economic and social benefits. 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 Supply, Demography, Government Intervention, Subsidies, Labour Market, Market Failure, Factor Immobility, Teaching of Economics, UK Economy, Unemployment, 2010-10-06T19:47:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/hysteresis1 http://www.tutor2u.net/blog/index.php/economics/comments/hysteresis1#When:17:45:01Z The idea of hysteresis from the current recession is well illustrated in this article. Millions of Americans risk falling out of the job market forever, the Organisation for Economic Co-operation and Development said today, as it cautioned a full recovery will take years. This recession has left the US with a long-term unemployment rate - a measure of those without work for more than six months - of 4.5pc, almost double that seen in the downturns of the 1980s and 1990s… Read more here. 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 Supply, OECD Economies, US Economy, Unemployment, Credit Crunch, 2010-09-21T17:45:01+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/as-macro-extreme-weather-hits-russian-economic-growth http://www.tutor2u.net/blog/index.php/economics/comments/as-macro-extreme-weather-hits-russian-economic-growth#When:07:39:00Z This BBC news article explains how extreme weather conditions in Russia this summer is hitting GDP growth. AS and A2 Specifications, AQA Economics Unit 2, EdExcel Economics Unit 2, AS Macro, Emerging Economies, Russia Economy, Commodities Markets, Cycles and Shocks, Aggregate Supply, Global Economy, 2010-08-26T07:39:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/warnings-of-hysteresis-for-the-eu-economy http://www.tutor2u.net/blog/index.php/economics/comments/warnings-of-hysteresis-for-the-eu-economy#When:12:05:00Z This is an updated blog post on the topic of hysteresis in the EU economy. The recession and financial crisis may lead to a permanent loss in potential economic output and a slower trend rate of growth in the future according to a study by the European Commission. The fall in potential GDP will be an example of hysteresis effects across the European economy and the cyclical downturn in output and jobs creates long term damage. 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, Cycles and Shocks, Aggregate Supply, Economic Growth, European Economy, Global Economy, Credit Crunch, OECD Economies, Spain Economy, US Economy, Teaching of Economics, UK Economy, Recession Watch, Unemployment, 2010-05-29T12:05:00+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/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/revision-presentation-supply-side-indicators-for-the-uk-economy http://www.tutor2u.net/blog/index.php/economics/comments/revision-presentation-supply-side-indicators-for-the-uk-economy#When:17:02:00Z This updated revision presentation should be really useful for colleagues and students addressing the crucial supply-side issues during revision for AS and A2 Economics… AS and A2 Specifications, Economics Presentations, A2 Macro, AS Macro, Cycles and Shocks, Aggregate Supply, Government Intervention, Labour Market, Macroeconomic Policies, Supply-side policies, Manufacturing Industry, Teaching of Economics, UK Economy, Unemployment, 2010-03-14T17:02:00+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/metal-prices-on-the-rise-again http://www.tutor2u.net/blog/index.php/economics/comments/metal-prices-on-the-rise-again#When:08:14:00Z What do the following businesses have in common? Anglo American Antofagasta BHP Billiton Eurasian Natural Resources Fresnillo Kazakhmys Lonmin Randgold Rio Tinto Vedanta Xstrata A2 Macro, AS Micro, Emerging Economies, Development Economics, Commodities Markets, Cycles and Shocks, Aggregate Supply, Global Economy, International Trade, Market Equilibrium and Price, Price Mechanism in Action, Price Volatility, Teaching of Economics, UK Economy, 2010-02-16T08:14:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/a-breathtaking-bridge http://www.tutor2u.net/blog/index.php/economics/comments/a-breathtaking-bridge#When:06:28:00Z It is the type of infrastructure project whose ambition and scale takes the breath away - this Independent article looks at the start of construction work for 30-mile Hong Kong-Zhuhai-Macau Bridge, which will link China’s southern economic hub of Guangdong province to Hong Kong and Macau. A2 Macro, AS Macro, Emerging Economies, China Economy, Cost Benefit Analysis, Cycles and Shocks, Aggregate Supply, Economic Growth, Teaching of Economics, 2010-01-28T06:28:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/pay-freezes-and-macro-performance http://www.tutor2u.net/blog/index.php/economics/comments/pay-freezes-and-macro-performance#When:08:13:00Z The forum post I am setting my AS macro students this week focuses on the possible economic impact of wage cuts and pay freezes. I am hoping it will help to develop their evaluative skills and get them to apply some AD/SRAS concepts. As the UK economy continues to experience a recession, pay is under pressure. The average wage in Britain, including bonuses, fell by 0.4 per cent in the three months to March 2009 – knocking about £95 off annual salaries to £24,000. People working in the private sector are at highest risk of a wage freeze or actual wage cut and public sector workers are also at risk of pay freezes in the months ahead. Suggested reading Half of UK firms plan a pay freeze (Telegraph) Pay freeze in deal to save car plants (Independent) Osborne plans one-year public sector wage freeze (Independent) Outlook for jobs will remain grim for several years (The Times) Wage cuts might condemn the economy to more misery (Telegraph) FTSE bosses get big salary rise (BBC news) Examine some ways in which a move towards wage cuts or pay freezes might affect the macroeconomic performance of the UK economy The forum posting is designed to encourage students to read around the subject, develop a concise written style and build evaluation skills. The Moodle system is set up so that students can only see the postings of others once they have submitted their only entry. I will post a couple of replies later on in the week. AS Macro, Cycles and Shocks, Aggregate Demand, Aggregate Supply, Labour Market, Teaching of Economics, UK Economy, Unemployment, 2009-11-16T08:13:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/uk-recession-and-business-capacity-teacher-presentation http://www.tutor2u.net/blog/index.php/economics/comments/uk-recession-and-business-capacity-teacher-presentation#When:12:11:00Z This streamed presentation provides a snapshot of the latest economic data on UK business capacity. The slump in output in the British economy has left many businesses and industries with a huge amount of spare capacity and the negative output gap is expected to grow beyond 6% of GDP in 2010 according to the OECD. A high level of spare capacity (or productive slack) has important consequences for jobs, inflationary pressures, planned investment and business profits. Launch interactive presentation on Recession & Capacity Download pdf handout of slides A2 Macro, Cycles and Shocks, Aggregate Demand, Capital Investment, Aggregate Supply, Labour Market, Teaching of Economics, UK Economy, Recession Watch, 2009-11-12T12:11:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/long-run-aggregate-supply-teacher-presentation http://www.tutor2u.net/blog/index.php/economics/comments/long-run-aggregate-supply-teacher-presentation#When:11:32:01Z This updated revision presentation looks at the AS Macro topic of Long Run Aggregate Supply Launch interactive presentation on Long Run Aggregate Supply Download pdf of presentation slides AS and A2 Specifications, AQA Economics Unit 2, AQA Economics Unit 4, Economics Presentations, EdExcel Economics Unit 2, EdExcel Economics Unit 4, A2 Macro, AS Macro, Cycles and Shocks, Aggregate Supply, 2009-11-12T11:32:01+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/short-run-aggregate-supply-teacher-presentation http://www.tutor2u.net/blog/index.php/economics/comments/short-run-aggregate-supply-teacher-presentation#When:08:41:00Z Our revision presentation on short run aggregate supply has just been updated.  Here are the links: Launch interactive revision presentation on Short Run Aggregate Supply Download pdf of slide handouts AS and A2 Specifications, AQA Economics Unit 2, AQA Economics Unit 4, Economics Presentations, EdExcel Economics Unit 2, EdExcel Economics Unit 4, A2 Macro, AS Macro, Cycles and Shocks, Aggregate Supply, 2009-11-11T08:41:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/global-food-prices-and-the-terms-of-trade http://www.tutor2u.net/blog/index.php/economics/comments/global-food-prices-and-the-terms-of-trade#When:12:55:00Z Agflation refers to a sustained increase in the general price of foodstuffs and in recent years we have become accustomed to seeing the prices of many basic staple products rising. The era of cheap food looks to be over for now on the back of significant demand-side factors, not least rising population levels, higher per capita incomes and speculative demand for foods as prices have become more volatile. Supply-side factors are also important in explaining strong inflation in food prices. Both sides of the market are discussed by Ambrose Evans-Pritchard in his column in the Telegraph today “Food will never be so cheap again” -  plenty of applied microeconomics here in addition to the huge number of macroeconomic issues that the trend rise in food prices has caused. One of the big changes in a switch in the terms of trade away from food importers towards food exporters. But do higher food prices necessarily cause agricultural supply to expand? A2 Macro, AS Micro, Emerging Economies, Development Economics, Commodities Markets, Cycles and Shocks, Aggregate Supply, Demography, Global Economy, International Trade, Standard of Living, 2009-10-26T12:55:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/broadband-and-economic-development http://www.tutor2u.net/blog/index.php/economics/comments/broadband-and-economic-development#When:14:51:01Z Access to and the speed and reliability of broadband infrastructure is one of the key institutional factors that impact on economic development. The lack of an affordable and cost-effective broadband network can be a huge barrier to economic growth especially in an age where companies in many rich countries are looking to outsource their back office and call centre services to countries where operating costs are lowest. The 2009 UNCTAD Information Economy Report provides a wealth of background information on the global digital divide. According to the latest report, businesses and consumers are 200 times more likely to have access to broadband in developed countries than in the poorest Least Developed Countries (LDCs). And the monthly cost of broadband access varies to an incredible degree - from over $1,300 a month in Burkina Faso, the Central African Republic to less than $13 in Egypt. A2 Macro, Emerging Economies, Development Economics, Business Economics, Economies of Scale, Cycles and Shocks, Aggregate Supply, Economic Growth, Economics of Technology, Global Economy, International Trade, Standard of Living, Teaching of Economics, 2009-10-24T14:51:01+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/paul-romer-on-growth-and-cities http://www.tutor2u.net/blog/index.php/economics/comments/paul-romer-on-growth-and-cities#When:07:39:01Z BBC Radio’s Global Business this week sees Peter Day in conversation with Professor Paul Romer from Stanford University, Paul Romer is an expert in the causes of long run run growth and his current focus is on the economics of new cities in developed and developing countries. It is a programme well worth listening to, Romer is tremendously optimistic about the opportunities created by faster economic growth - especially growth built around innovation and appropriate rules systems. A2 Macro, AS Macro, Emerging Economies, Development Economics, Cycles and Shocks, Aggregate Supply, Economic Growth, Environmental Economics, Global Economy, Government Intervention, Standard of Living, Teaching of Economics, 2009-10-24T07:39:01+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/human-and-social-capital-and-pathways-to-prosperity http://www.tutor2u.net/blog/index.php/economics/comments/human-and-social-capital-and-pathways-to-prosperity#When:21:17:00Z Tom Aedy picks an article by Michael Milken in the FT and focuses on the importance of human capital in a competitive global economy - Milken calls this the world’s most valuable asset. A2 Macro, AS Macro, Emerging Economies, Cycles and Shocks, Aggregate Supply, Economic Growth, International Trade, Teaching of Economics, Supply-side policies, 2009-10-14T21:17:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/gloomy-summary http://www.tutor2u.net/blog/index.php/economics/comments/gloomy-summary#When:21:02:00Z Here is a summary of four reports posted on the Business and Economics sections of the BBC News website over the last few days. Be warned - none of them are particularly hopeful, the green shoots of summer giving way to autumn mists. A2 Macro, AS Macro, Cycles and Shocks, Aggregate Demand, Capital Investment, Consumer Spending, Aggregate Supply, Exchange Rates, Inflation and Deflation, UK Economy, Monetary Policy, 2009-10-13T21:02:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/demographic-change-the-rise-of-the-oldest-old http://www.tutor2u.net/blog/index.php/economics/comments/demographic-change-the-rise-of-the-oldest-old#When:09:02:01Z The ONS published a focus on the elderly last week and some of the summary changes in age structure for the UK population can be found here. One of their key findings is that the number of people living beyond 85 years of age is set to grow rapidly in the years ahead. This will have important effects on the pattern of demand for different goods and services and the pressures on health and welfare services. Students might use some of these figures to tease out some of the likely consequences for the British economy going forward and also for the effects on our quality of life as we age According to the ONS, “The fastest population increase has been in the number of those aged 85 and over, the ’oldest old‘. In 1983, there were just over 600,000 people in the UK aged 85 and over. Since then the numbers have more than doubled reaching 1.3 million in 2008. By 2033 the number of people aged 85 and over is projected to more than double again to reach 3.2 million, and to account for 5 per cent of the total population.” Half of new born babies can expect to live to 100! This BBC video is sure to promote some discussion. Here is the link to the ONS ageing population interactive map A2 Macro, AS Macro, Cycles and Shocks, Aggregate Supply, Demography, Economic Growth, Health Economics, Market Equilibrium and Price, Nature of Demand, UK Economy, 2009-10-03T09:02:01+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/a2-economics-revision-external-shocks http://www.tutor2u.net/blog/index.php/economics/comments/a2-economics-revision-external-shocks#When:19:26:00Z We have created this PowerPoint for A2 Economics students who wish to update their understanding of external macroeconomic shocks and cyclical fluctuations. Viewed streamed version of the presentation Download SCORM-compliant VLE version (ZIP file) Download printable pdf version A2 Macro, Cycles and Shocks, Aggregate Demand, Capital Investment, Consumer Spending, Saving, Aggregate Supply, Global Economy, 2009-09-28T19:26:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/infrastructure-investment-to-keep-the-chinese-economy-driving-forward http://www.tutor2u.net/blog/index.php/economics/comments/infrastructure-investment-to-keep-the-chinese-economy-driving-forward#When:07:26:00Z The Chinese government has moved heaven and earth to keep their economy growing during the global economic crisis. The focus has been on boosting domestic demand such as consumer spending and capital investment. The government is behind the world’s largest stimulus programme - investing around $566bn - and the government has pledged to go ahead with large-scale projects. Quentin Sommerville reports on a huge infrastructural project - a good video to use to illustrate the multiplier effects of capital spending. A2 Macro, AS Macro, Emerging Economies, China Economy, Cycles and Shocks, Aggregate Demand, Capital Investment, Aggregate Supply, Government Intervention, Credit Crunch, 2009-09-15T07:26:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/how-recession-has-affected-migration http://www.tutor2u.net/blog/index.php/economics/comments/how-recession-has-affected-migration#When:08:03:01Z The BBC has commissioned a special report on the impact that the global recession has had on flows of migrants workers in the world economy. Deteriorating employment prospects in many of the advanced rich economies has stemmed the inflow of migrants - Spain and the UK are two good examples here. But the ripple effects of the credit crunch have hit virtually every economy. Although much migration appears to be cyclical (and in many cases, seasonal in nature) many migrants have decided to stay put in their new country of residence in the hope of weathering the economic storm or because their chances of finding viable work in their home country have diminished too. One thing is sure, the scale of migrant remittances has fallen sharply and is likely to do so again in 2010 - remittances form a high percentage of GNP for many of the world’s poorest nations. This BBC report contains some very useful graphics that might be used to aid classroom discussion. A2 Macro, AS Macro, Emerging Economies, Development Economics, Cycles and Shocks, Aggregate Supply, Demography, European Economy, EU Enlargement, Global Economy, Credit Crunch, Labour Market, UK Economy, Recession Watch, 2009-09-08T08:03:01+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/meeting-the-challenge-of-food-security http://www.tutor2u.net/blog/index.php/economics/comments/meeting-the-challenge-of-food-security#When:13:28:00Z The government has published a new report on what is needed to meet the growing list of challenges to the cost and security of our food supplies in the years ahead. The era of cheap food seems to be over and agflation - high food price inflation - is something that has hit the pockets of millions of families in virtually every country over recent years. This Independent article flags up some of the key policy issues regarding food supply in the UK - a country whose self-sufficiency is under threat as forty per cent of the food we eat is now sourced from overseas. “In a list of challenges to UK food security are the changing climate, floods, drought, soil erosion, water scarcities and the breakdown of ecosystems. Global temperatures may rise two to three degrees in the next 50 years, threatening large-scale crop failure in Africa….......British households still spend on average less than 10 per cent of their income on food, compared with 70 per cent in many developing countries.” BBC news video on this topic A2 Macro, AS Macro, AS Micro, Agriculture, Emerging Economies, Cost Benefit Analysis, Cycles and Shocks, Aggregate Supply, Environmental Economics, Global Economy, Market Equilibrium and Price, Nature of Supply, 2009-08-11T13:28:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/did-you-feel-the-shift http://www.tutor2u.net/blog/index.php/economics/comments/did-you-feel-the-shift#When:21:13:00Z Yesterday the UK’s Production Possibility Frontier shifted to the right – did you notice? The potential supply of labour to the workforce increased, as ministers decided that a review of the default retirement age of 65 should be brought forward to next year rather than 2011. Currently 1.3 million people work beyond the state retirement age, but apparently many more say that they would like to do so. For some this is because they don’t want to have to rely on the state pension as their only source of income from the age of 65, for others because they are quite capable of continuing to make a full contribution to the workforce, and choose to do so. Age discrimination legislation is instrumental here - a number of age discrimination cases are waiting in the pipeline for the outcome of this and another challenge being brought against the government by the charity Help the Aged and Age Concern next week. AS Macro, Cycles and Shocks, Aggregate Supply, Demography, Economic Growth, Labour Market, UK Economy, 2009-07-14T21:13:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/falling-productivity-a-cause-or-symptom-of-the-recession http://www.tutor2u.net/blog/index.php/economics/comments/falling-productivity-a-cause-or-symptom-of-the-recession#When:17:00:00Z The annual rate of growth of output per hour worked (seasonally adjusted) for the UK economy is falling for the first time since the mid 1990s. There are good reasons for thinking that labour productivity tends to directly related to the business cycle; when demand and output is strong, firms will be making full use of their existing factor resources and capacity utilisation will be high. In a downturn, there are spare factor resources and productivity growth may suffer if businesses do not wish to adjust their labour force in response to declining demand. The danger is that, in the absence of flexible pay that reflects lower output per hour, weaker productivity will cause a rise in unit labour costs and this will put further pressure on business profit margins and the internal funds available to finance investment. UK productivity continues to lag behind levels achieved by many of our major international competitor nations. A2 Macro, AS Macro, Business Economics, Cycles and Shocks, Aggregate Demand, Capital Investment, Aggregate Supply, Manufacturing Industry, UK Economy, Recession Watch, 2009-07-14T17:00:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/qa-does-a-positive-output-gap-always-mean-rising-inflation http://www.tutor2u.net/blog/index.php/economics/comments/qa-does-a-positive-output-gap-always-mean-rising-inflation#When:06:11:00Z A student asks “Does a positive output gap always mean rising inflation?” Economics Q&A, Q&A - Macro, A2 Micro, AS Micro, Cycles and Shocks, Aggregate Demand, Aggregate Supply, Inflation and Deflation, 2009-06-02T06:11:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/qa-ad-and-inflationary-pressures http://www.tutor2u.net/blog/index.php/economics/comments/qa-ad-and-inflationary-pressures#When:17:38:00Z A student asks: Will a rise in AD will only cause cost-push inflation if there is a positive output gap? Economics Q&A, Q&A - Macro, AS Macro, Cycles and Shocks, Aggregate Demand, Aggregate Supply, Inflation and Deflation, 2009-06-01T17:38:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/qa-what-is-the-productivity-gap http://www.tutor2u.net/blog/index.php/economics/comments/qa-what-is-the-productivity-gap#When:17:23:00Z The productivity gap is a phrase to describe a sustained difference in measured output per worker (or GDP per person employed) between one country and another. Economics Q&A, Q&A - Macro, AS Macro, Cycles and Shocks, Aggregate Supply, Economic Growth, Macroeconomic Policies, Supply-side policies, UK Economy, 2009-06-01T17:23:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/spare-capacity-in-manufacturing http://www.tutor2u.net/blog/index.php/economics/comments/spare-capacity-in-manufacturing#When:15:31:00Z Spare capacity is a term that makes increasingly frequent appearances in AS macro multiple choice and data response questions. A survey from the British Chambers of Commerce finds that only 20% of manufacturing firms are operating at full-tilt whereas 40% of service sector businesses report that they are close to their capacity levels. Spare capacity rises when orders and demand tails off leaving under-utilised capital and labour resources. We have seen this in the steep contraction in production in new housebuilding and in car manufacturing and this inevitably has knock-on effects for supply-chain businesses. Operating below capacity can lead to a rise in the average fixed costs of production and therefore put pressure on profit margins. Little wonder that many manufacturing businesses have moved towards short-time working and have mothballed some of their production capacity. This BBC Midlands news article covers a march for jobs in the West Midlands   A2 Macro, AS Macro, Business Economics, Cycles and Shocks, Aggregate Demand, Capital Investment, Aggregate Supply, Manufacturing Industry, UK Economy, Recession Watch, 2009-05-26T15:31:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/revision-importance-of-business-expectations http://www.tutor2u.net/blog/index.php/economics/comments/revision-importance-of-business-expectations#When:08:55:00Z Expectations matter hugely for businesses - and changes in business sentiment have important macroeconomic effects at different stages of the economic cycle. This brief revision note looks at the role of expectations. AS Macro, Business Economics, Cycles and Shocks, Aggregate Demand, Capital Investment, Aggregate Supply, 2009-05-06T08:55:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/obamas-pledge-on-rd http://www.tutor2u.net/blog/index.php/economics/comments/obamas-pledge-on-rd#When:21:19:00Z “I am here today to set this goal: we will devote more than 3% of our GDP to research and development,” If Obama succeeds in his aim, the US economy will raise investment in research and development as a share of national income - AS students might consider some of the likely demand and supply-side effects of such an aim. A good article to use when teaching supply-side policies. The UK of course is some distance below the US levels when it comes to research and development spending. AS Macro, Cycles and Shocks, Aggregate Supply, Economic Growth, UK Economy, US Economy, Supply-side policies, 2009-04-27T21:19:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/first-hints-of-the-brain-drain-effect http://www.tutor2u.net/blog/index.php/economics/comments/first-hints-of-the-brain-drain-effect#When:06:19:00Z The government’s decision to increase the top rate of income tax from 40% to 50% is pure political opportunism from a party that has given up any realistic hope of power at the next election. Cue a chance to stick a few poorly aimed knives into the body of up and coming entrepreneurs for a measure that will raise a little extra revenue but which will also do huge long term damage to enterprise in the British economy. From next year anyone earning more than £150,000 a year will pay 50% income tax. The move replaced the 45% tax bracket threatened in the pre-budget report last November. Here are the first signs of a brain drain effect taking hold. And even more worrying is the threat of a brain blockade - as highly skilled people in industries such as technology, medicine, industrial research and so son may now shun coming to the UK in favour of competing locations. Those with a cushion of wealth are best placed to relocate, in a digital age the barriers to conducting business off-shore are so much lower. The Telegraph provides a handy guide for those searching for an atlas and airline timetable this weekend. A2 Macro, AS Macro, Cycles and Shocks, Aggregate Supply, Government Intervention, Government Failure, UK Economy, Fiscal Policy, Supply-side policies, 2009-04-26T06:19:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/challenges-and-opportunities-of-an-expanding-population http://www.tutor2u.net/blog/index.php/economics/comments/challenges-and-opportunities-of-an-expanding-population#When:17:18:00Z The evergreen “Big Question” feature in the Independent today looks at demographic economics. The number of people in the UK is growing by 1,000 a day. There are 61 million people officially resident in Britain today and this is expected to grow by 4.4 million by 2016 - Is Britain going to be able to support an ever-expanding population? AS Macro, AS Micro, Cycles and Shocks, Aggregate Supply, Economic Growth, UK Economy, 2009-04-17T17:18:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/qa-will-the-uk-economys-ppf-shift-inwards-because-of-the-recession http://www.tutor2u.net/blog/index.php/economics/comments/qa-will-the-uk-economys-ppf-shift-inwards-because-of-the-recession#When:12:16:00Z Will the UK economy’s PPF shift inwards because of the recession? This is an interesting question and hints that a deep recession that lasts longer than we expect can have a damaging effect on the UK economy’s supply-side performance and productive potential. Economics Q&A, Q&A - Macro, A2 Macro, AS Macro, Cycles and Shocks, Aggregate Supply, Introductory Economics, UK Economy, Unemployment, 2009-03-31T12:16:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/qa-what-is-the-accelerator-effect http://www.tutor2u.net/blog/index.php/economics/comments/qa-what-is-the-accelerator-effect#When:15:44:00Z What is the accelerator effect? The accelerator effect describes a principle where how much a business chooses to spend on capital investment will be influenced by how quickly demand is growing for their products. Economics Q&A, Q&A - Macro, A2 Macro, AS Macro, Cycles and Shocks, Aggregate Demand, Capital Investment, Aggregate Supply, Economic Growth, GCSE Economics, 2009-02-22T15:44:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/supply-side-indicators-for-the-uk http://www.tutor2u.net/blog/index.php/economics/comments/supply-side-indicators-for-the-uk#When:10:17:00Z I am about to start teaching supply-side economics with my AS students so the time has come to update some of the charts I use to illustrate aspects of supply-side performance. This is available to download as a PowerPoint file below. A2 Macro, AS Macro, Cycles and Shocks, Aggregate Demand, Capital Investment, Aggregate Supply, UK Economy, Supply-side policies, 2009-02-15T10:17:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/apprenticeships-and-economic-performance http://www.tutor2u.net/blog/index.php/economics/comments/apprenticeships-and-economic-performance#When:12:32:11Z My Monday morning edition of the Financial Times carried an important article on the prospects for apprenticeships during the economic downturn. The broad thrust of the piece was encouraging - a number of Britain’s biggest companies have said that they do not plan to curtail the number of apprenticeship programmes on offer to school and college leavers. It is not simply a case of altruism - a number of studies have shown that investing in the human capital of the workforce can achieve a positive payback in just a few years. “Recent studies have shown that investing in an apprentice is often cheaper than recruiting qualified workers from rivals and then having to retrain them in the procedures of their new employer…...BT had “calculated a net financial benefit of over £1,300 ($1,910) per apprentice a year when compared with non-apprentice recruitment”......A more recent study by Warwick university for the taskforce’s successor, the Apprenticeship Ambassadors Network, found that it cost £28,762 to train an engineering apprentice but the “employer’s investment was, on average, paid back in less than three years”. Why is the success of apprenticeship schemes important for the longer-term health of the UK economy? Many of the benefits of vocational programmes show through on the supply-side of the economy: A lower risk of structural unemployment through lower occupational immobility Less pressure on the welfare benefits system resulting from long term unemployment A reduction in the number of unfilled vacancies for skilled workers Higher productivity and better paid jobs - which then boosts aggregate demand Ultimately - higher profits for businesses with successful apprenticeship schemes Reduced dependence on inflows of migrant workers Better skilled workers will improve the quality of work and provide a stronger platform for greater innovation in their chosen fields Improved customer service e.g. in industries such as gas supply, plumbing and construction The FT article can be found here The website of the Apprenticeship Ambassadors Network is also worth visiting A2 Macro, AS Macro, Business Economics, Cycles and Shocks, Aggregate Supply, Economic Growth, GCSE Economics, Labour Market, Market Failure, Factor Immobility, UK Economy, Unemployment, Supply-side policies, 2008-12-29T12:32:11+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/pay-cuts-in-a-recession http://www.tutor2u.net/blog/index.php/economics/comments/pay-cuts-in-a-recession#When:19:46:33Z Pay cuts and pay freezes are being flagged up as an increasingly common option by businesses struggling to survive in the early stages of the recession. Formula 1 drivers are being asked to consider cuts in their earnings as teams look to control costs ahead of the 2009 season; staff working for the publisher Penguin who earn over £30,000 have had their salaries frozen. Premier Rugby in Britain will agree, next month, on a reduction in the salary cap from £4m to £3.5m. And a new survey from the British Chambers of Commerce covering 300 member firms has found that 43% plan to freeze wages and salaries in the coming year. Nearly one business in ten will go a step further and attempt to cut basic pay and salaries – a measure described in this article from the Sunday Times as “almost unprecedented in the experience of today’s workers.” A2 Macro, A2 Micro, AS Macro, AS Micro, Business Economics, Cycles and Shocks, Aggregate Supply, Government Intervention, Minimum Prices, Labour Market, UK Economy, Recession Watch, Unemployment, 2008-12-28T19:46:33+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/economics-of-energy-over-a-barrel http://www.tutor2u.net/blog/index.php/economics/comments/economics-of-energy-over-a-barrel#When:13:42:09Z “The plunging oil price is like a dangerously addictive painkiller: short-term relief is being provided at a cost of serious long-term harm” If you are interested in the economics of energy then the Financial Times today is well worth buying from the news stand. Ed Crooks provides a superb analysis of the effects that oil and gas price volatility is having on the economic viability of different segments of the energy industry - ranging from conventional oil to unconventional oil (including oil shale, coal to liquid and the oil sands projects) and also the impact of changing prices on demand for and the likely returns from biofuels, nuclear, coal and renewable supplies of energy. There is a superb graphic on page 11 that will grace any classroom wall and make a tremendous teaching handout for students who want to understand more about the demand outlook for different fuels. Here is the link to Ed’s article. But best to buy your own copy of the FT today for the graphic alone! A2 Macro, AS Micro, Commodities Markets, Cycles and Shocks, Aggregate Supply, Oil and Gas, Teaching of Economics, 2008-12-22T13:42:09+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/beta-currencies-and-pmd http://www.tutor2u.net/blog/index.php/economics/comments/beta-currencies-and-pmd#When:09:51:11Z Beta Currencies The continued depreciation of sterling - most notably against the Euro - continues to dominate the economic headlines. One Euro now buys 95 pence and parity is much more likely than I thought when I wrote about the exchange rate last week. For your exams remember that you need to have a clear handle on Why the currency is falling (causation) What the main demand and supply-side effects of this are (consequences) The possible policy responses (intervention) With the latter keep in mind that the government and the central bank does not have a target for the external value of the pound although they recognise that it plays an important role in influencing the components of aggregate demand (C+I+G+X-M and also changes in short run aggregate supply (SRAS) e.g. through movements in the prices of imported goods and services. Another approach for critical analysis of the exchange rate’s fall is to use the acronym PMD P - plusses - i.e. what are the main advantages of a fall in the currency? M - minuses - what are the negative effects for the UK economy at this time and for different agents (businesses and consumers) D - depends - “it depends on” is one of the best evaluation phrases you can use - sterling has fallen by more than 20 per cent (on a trade weighted basis) over the last year. This is a significant depreciation - but the effects DEPEND on many factors - here are a few: Do exporters reduce their overseas prices or choose instead to keep prices the same and make a higher profit margin? Do foreign consumers switch their demand to UK exports if and when our exports become more price competitive? Will the negative real income effect of a global economic downturn offset the competitive advantage from having a lower exchange rate? Will higher import prices help to prevent deflation in the UK next year? Ambrose Evans-Pritchard has an article in the Telegraph today which argues that “Sterling fall is a life-saver for UK economy” “Stephen Jen, currency chief at Morgan Stanley, said sterling is a “high-beta” currency, meaning that it is highly-geared to the global economic cycle. It shoots up during good times and plunges during bad times. It should return to health if and when the world emerges from economic winter.” A related piece claims that the Sterling slide is the worst since 1931 “The pound has now fallen by 23pc against a basket of other currencies, according to figures from the Bank of England. The fall is sharper than the devaluations in 1992, after leaving the Exchange Rate Mechanism, 1976, when the International Monetary Fund was forced to intervene, and 1949, when a host of countries slumped against the dollar. The devaluation is only matched by the moment in 1931 when, under Ramsay MacDonald, the UK was forced to abandon the gold standard, plunging by more than 24pc against the dollar. The parallel is significant, since many economists have attributed the gold standard exit as one of the main reasons the UK enjoyed a relatively mild depression in the 1930s, while the US suffered mass unemployment and saw its economy shrink by a third.” A2 Macro, AS Macro, Balance of Payments, Cycles and Shocks, Aggregate Demand, Aggregate Supply, Exchange Rates, UK Economy, Recession Watch, Monetary Policy, 2008-12-19T09:51:11+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/who-are-the-bank-of-englands-spies-on-the-ground http://www.tutor2u.net/blog/index.php/economics/comments/who-are-the-bank-of-englands-spies-on-the-ground#When:19:50:01Z The Bank of England has a network of Regional Agents operating across the length and breadth of the UK. Think of the Regional Agents as a form of intelligence network designed to give the Bank of England a feel for what is really happening on the ground. A2 Macro, AS Macro, Cycles and Shocks, Aggregate Demand, Capital Investment, Aggregate Supply, Inflation and Deflation, Manufacturing Industry, UK Economy, Recession Watch, Monetary Policy, 2008-10-25T19:50:01+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/the-changing-pattern-of-output http://www.tutor2u.net/blog/index.php/economics/comments/the-changing-pattern-of-output#When:21:15:00Z In introductory macro today we were discussing the contribution that different industries make to the GDP of the UK economy. The chart attached to this blog shows the quarterly index of value added from four sectors plus the total value for GDP. Although this dataset runs only since the turn of the decade, it reveals the divergent fortunes in the value of output flowing from construction, manufacturing, oil and gas extraction and business & financial services. On some estimates, the financial services sector now accounts for over 10% of total UK GDP with manufacturing, oil and gas in long term relative decline and construction entering recession after the bursting of the housing bubble. Has the economy become too dependent on financial services for growth? I have attached the chart in a PowerPoint file in case it might be of use as a teaching handout for student annotations and calculations. More detailed statistics on UK national output can be found from the Statistics Commission. PowerPoint Chart UK_GDP_by_Output.ppt David Smith The Party is over for Shrinking Financial Sector (Sunday Times) A2 Macro, AS Macro, Cycles and Shocks, Aggregate Supply, Manufacturing Industry, Oil and Gas, UK Economy, 2008-09-23T21:15:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/poverty-trap-worsens http://www.tutor2u.net/blog/index.php/economics/comments/poverty-trap-worsens#When:17:59:00Z The soaring cost of child care is worsening the poverty trap according to a new report commissioned for the save the Children Fund in Scotland. More than one quarter of Scots parents on low incomes cannot work full time because of the cost of registered childcare which has risen by more than 10 per cent this year across most of the country. The average cost of child care in Britain during the holiday season is nearly £90 per week. The Times has this article “Joanne Brady, a single mother of two children from Glasgow, is unable to work because she loses more in means-tested child tax credits than she gains in income. “They take 20 per cent off for each child when you go to work. You still have to pay your housing, travel and lunches and it’s just not adequate.” Ms Brady, 27, is among the 28 per cent of parents with children under 18 and an income of less than £15,000.” And the BBC also covers the report. A2 Micro, AS Micro, Cycles and Shocks, Aggregate Supply, Government Intervention, Government Failure, Labour Market, 2008-07-18T17:59:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/when-costs-are-too-much-to-bear http://www.tutor2u.net/blog/index.php/economics/comments/when-costs-are-too-much-to-bear#When:10:17:00Z The news on UK inflation this week wasn’t good - it is difficult to find anything positive in seeing CPI inflation surge to an eleven year high of 3.8% and the RPI climbing to just under 5%. Little wonder that the government is getting more paranoid by the hour about the dangers of losing the battle on pay restraint as a wage price spiral takes hold. The monthly inflation data tells us what has been happening to prices for a basket of goods and services - but to my mind what is more worrying is the data on input and output prices facing manufacturing businesses. My chart above shows just how steep has been the acceleration in inflation in the costs of imported foods and raw materials - costs are rising in excess of 20% pa for both categories. There comes a point when businesses simply have to raise their prices to avoid a calamitous fall in profits - and that point seems to have been reached. Manufacturing output prices are not rising at an annual rate of more than 10% and this “factory gate” inflation will flow through from wholesale to retail level in the space of a few weeks and months. If you want an early warning of why the inflation problem will not go away in 2009 - this one of the key indicators to watch. A2 Macro, AS Macro, Cycles and Shocks, Aggregate Supply, Inflation and Deflation, UK Economy, 2008-07-16T10:17:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/us-human-capital-in-decline http://www.tutor2u.net/blog/index.php/economics/comments/us-human-capital-in-decline#When:15:57:01Z Clive Crook’s excellent blog asks whether the US economy’s growth potential will be harmed by a forecast that “Over the coming years, baby-boomers departing from the labour force will have better educational qualifications than the younger workers replacing them. If the ultimate source of an economy’s ability to grow and prosper is its human capital, the US is in trouble.” Is there an equivalent study available for the UK?   A2 Macro, Cycles and Shocks, Aggregate Supply, Economic Growth, US Economy, 2008-07-10T15:57:01+00:00