Here is a great selection of videos on Greece, posted in Tutor2u. I remember using this website for my revision, please have a look at their other posts.
http://www.tutor2u.net/blog/index.php/economics/comments/unit-4-macro-video-resources-on-the-euro-crisis?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+economics_news+%28tutor2u+Economics+Blog%29#When:08:08:15Z
Sunday, 11 March 2012
Cigarettes on the Black Market
This post is an example of the Law of unintended consequences. One in three cigarettes sold in London in the beginning of this year is illegal, in contrast to the one in five that it was at the end of 2011. The black market for tobacco is responsible a loss of revenue to the Treasury accounting to more than £2billion, going to smugglers and criminal gangs instead.
Key points to remember from this case study:
1. Increasing taxes on demerit goods may not provide incentives for people to give up/consume less, instead giving incentives for people to sell illegitimate 'illicit whites'.
2. They are bought and shipped from China very cheaply and sold cheaply for people to consume (Black Market). Evidence against free trade and China?
3. Taxation is designed to raise money for government expenditure, however £25million is spent by the government to reduce black market activity.
4. Demand for tobacco (as with any demerit good) is inelastic, meaning that the proportionate rise in price will lead to a less proportionate fall in demand, because consumers are satisfied with illegitimate copies.
Smugglers can make approximately £1.65million from bringing in a container of 10million counterfeit cigarettes. Each packet is made for just 20p and they have been found to contain substances such as asbestos (a harmful substance known to cause lung cancer and other illnesses).
Key points to remember from this case study:
1. Increasing taxes on demerit goods may not provide incentives for people to give up/consume less, instead giving incentives for people to sell illegitimate 'illicit whites'.
2. They are bought and shipped from China very cheaply and sold cheaply for people to consume (Black Market). Evidence against free trade and China?
3. Taxation is designed to raise money for government expenditure, however £25million is spent by the government to reduce black market activity.
4. Demand for tobacco (as with any demerit good) is inelastic, meaning that the proportionate rise in price will lead to a less proportionate fall in demand, because consumers are satisfied with illegitimate copies.
Smugglers can make approximately £1.65million from bringing in a container of 10million counterfeit cigarettes. Each packet is made for just 20p and they have been found to contain substances such as asbestos (a harmful substance known to cause lung cancer and other illnesses).
Sunday, 26 February 2012
Costs of Inflation
Watch this video about the costs of inflation: http://www.youtube.com/watch?v=9zFQ0KhKkpw&feature=youtu.be
Saturday, 18 February 2012
Profit Maximisation Point
The profit maximisation point is MR=MC. Below are the diagrams for the profit maximisation point for both monopoly and perfect competition markets. The profit maximisation point is the quantity and price level that the firm will produce at to ensure the most benefit. Before point X, MR is greater that MC thus profits will rise and rise. After point X, MC is greater than MR, thus firms do not see it profitable to produce after that point because they lose money.
For a monopolist, firms charge a price level higher than profit maximisation because it maximises producer surplus and consumers are still willing to purchase at that price level (See notes here). The quantity produced remains at Q1. For a firm in perfect competition, the level of output produced is at X and the price charged to consumers is P1, making the firm productively and allocatively efficient. For more notes, see here.
For more notes on perfect competition and monopoly markets, see here and here, respectively.
For a monopolist, firms charge a price level higher than profit maximisation because it maximises producer surplus and consumers are still willing to purchase at that price level (See notes here). The quantity produced remains at Q1. For a firm in perfect competition, the level of output produced is at X and the price charged to consumers is P1, making the firm productively and allocatively efficient. For more notes, see here.
For more notes on perfect competition and monopoly markets, see here and here, respectively.
Tuesday, 14 February 2012
Inflation for January 2012
Inflation fell to 3.6% in January, as forecasters predicted. Read more on the Financial Times. The ease in inflation may give signs that this 'stagflation' that the economy has been experiencing may be shifting away. The coming months will tell how unemployment will change in response (Phillips Curve). Inflation faces downward pressure from the effects of higher unemployment, slow exports markets (due to the Eurozone) and lower energy prices (causing a rise in imports).
A further £50bn Quantitative Easing that the MPC authorised earlier this month shows that there is still deficient demand in the economy and it may continue to stay low. Thus economists are predicting more QE to keep inflation from falling below the government's 2% target.
A further £50bn Quantitative Easing that the MPC authorised earlier this month shows that there is still deficient demand in the economy and it may continue to stay low. Thus economists are predicting more QE to keep inflation from falling below the government's 2% target.
Sunday, 5 February 2012
Fiscal Policy video
Paj Holden's video on fiscal policy is a great material for revision or learning fiscal policy from scratch.
Key points/summary of topics explained
Fiscal policy - manipulating government spending and taxation levels in order to manage the level of AD in the economy.
Definition of AD (C+I+G+X-M)
In a weak economy (low AD), the government might consider loosening fiscal policy - lower taxes (boost consumption) and increasing government spending. Disadvantage of loose fiscal policy, if spending becomes too high, deficits rise, creating problems, such as the Eurozone crisis.
Explains the Euro crisis
Business cycle and output gaps
Note: The AD/AS diagram he uses shows the Keynesian LRAS (notes to come!)
Case Study: Greece
---> GDP growth of -6.6%
---> Budget deficit (2009) was 15% of GDP. In 2010, it was 11% of GDP and in 2011 it was 8% as a result of increased taxes and lower government spending (austerity measures). However the Greek government is still spending 8% more than revenues gained from taxation. There is also interest gained from the additional spending, demonstrating the importance of their fiscal constraints.
Quantitative Easing
Key points/summary of topics explained
Fiscal policy - manipulating government spending and taxation levels in order to manage the level of AD in the economy.
Definition of AD (C+I+G+X-M)
In a weak economy (low AD), the government might consider loosening fiscal policy - lower taxes (boost consumption) and increasing government spending. Disadvantage of loose fiscal policy, if spending becomes too high, deficits rise, creating problems, such as the Eurozone crisis.
Explains the Euro crisis
Business cycle and output gaps
Note: The AD/AS diagram he uses shows the Keynesian LRAS (notes to come!)
Case Study: Greece
---> GDP growth of -6.6%
---> Budget deficit (2009) was 15% of GDP. In 2010, it was 11% of GDP and in 2011 it was 8% as a result of increased taxes and lower government spending (austerity measures). However the Greek government is still spending 8% more than revenues gained from taxation. There is also interest gained from the additional spending, demonstrating the importance of their fiscal constraints.
Quantitative Easing
Tuesday, 24 January 2012
Bad News for Britain
The UK's budget deficit (amount by which government expenditure is in excess of tax revenues) rose above £1 trillion (£1,000,000,000,000!) for the first time, in December 2011. This spells bad news for us because:
1. It means the government's deficit reduction plan is not working, which could mean deeper cuts for the rest of 2012.
2. The Eurozone crisis
Use this as a case study for what happens if the government uses Keynesian policies to increase economic growth (Labour's government policies....). Unemployment rose the same time as the deficit reaches an all time high, evidence for crowding out?
1. It means the government's deficit reduction plan is not working, which could mean deeper cuts for the rest of 2012.
2. The Eurozone crisis
Use this as a case study for what happens if the government uses Keynesian policies to increase economic growth (Labour's government policies....). Unemployment rose the same time as the deficit reaches an all time high, evidence for crowding out?
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