Spot of Economics

No 212: UCL Conference. Global Economic Outlook. Part 1.

2011-12-16T09:54:00.000Z

On 10 December the economic conference was held in UCL and some Bellerbys students found it particularly interesting to visit. One of the presentations was made by Dr. Linda Yueh who was investigating the global economy and the engines of growth of countries nowadays.
In her presentation "Global Economic Outlook: Engines of growth", Dr. Yueh discussed several issues of modern economy that we found really important.

As can be seen from this graph, the recession in the period between July 2008 and March 2009 mostly affected high income countries that managed to start recovering far later than developing countries. However, it is evident that the speed of recovery was almost equal in all the countries covered by the research. Moreover, if to compare the patterns of developing countries before and after July 2008, it was Chinese economy that made their economic growth slower before the crisis, nonetheless, it was Chinese economy that caused the most part of development afterwards.
It is remarkable that according to the World Bank data, high income countries have entered the stage of new recession, whereas developing countries are continuing to grow. Yet, it is quite difficult to predict whether these trends are going to continue in the future or not.
By Galeeva Dariya and Zaytseva Alina.

No 211: What's been happening and what's going to happen

2011-11-11T15:01:00.000Z

HI there folks!

I know that some of you have been visiting over the past few months, and that it seems like this blog has taken a rather long holiday.

I was very busy getting ready for the Maths exam from hell in October, and since then I have had a lot of other things to be getting on with.

I do plan for this blog to continue, but unfortunately I cannot carry on doing it all myself.

I'd love it if some of you wanted to write something for the blog. Please let me know if you are interested at.....

sirspottiswoode@gmail.com

On Summer Holiday: Back on 16th August (just before A-level results!)

2011-06-25T10:56:00.000+01:00

No 210: Govt spending v Govt Borrowing

2011-06-22T10:04:00.000+01:00

EITHER of these topics could be in the exam tomorrow. However, be careful, they are not exactly the same.

Think about yourself for a moment: are the reasons you spend money the same as the reasons why you might need to borrow money? For example, are you likely to borrow money just to buy food? Are you likely to need to spend money every day? Are you likely to need to borrow money every day?

In other words, governments need to borrow money to spend only on certain things, and only at certain times.

We know that govt borrowing is necessary when G > T. Therefore a govt will need to borrow if there is a sudden increase in G and/or a sudden fall in T. What could cause such situations to happen?

In a question about the effects of government borrowing, you can refer to some arguments about the effectivess of government spending. I would say, "some economists argue that since govt spending for demand mangement is ineffective, therefore they should not borrow money to finance this" and give some reasons for it.

But what you are really looking for are the effects of the borrowing itself. These could be:

higher interest payments mean govt has to reduce other areas of spending or raise taxes (as we have seen with Cameron's spending cuts);
possible need for bail-out (ECB and/or IMF) which would lead to even tighter fiscal policy;
reduced confidence in the govt's ability to manage the economy sucessfully, particularly affecting future government borrowing;
inflationary risk if govt increases money supply to pay borrowing or deliberately causes inflationary pressures to reduce the real cost of borrowing;
financial crowding out;
an unacceptable burden of debt passed on to future generations.

Try to read about what is happening in Greece at the moment to give you a sense of the real-world consequences of excessive govt borrowing.

Also be careful not to mix up the base rate of interest and the rate government pays on bonds.

The first is the rate offered by govt to buyers of govt debt. The second is the rate govt lends to banks.

The rate on bonds affects the amount of interest govt will have to pay back in the future. It does not affect the other interest rates in the economy, particularly those for households and firms. It might though affect the attractiveness for banks of lending to govts or to businesses/consumers. It could affect the exchange rate too, as described next.

If the govt wants to borrow a lot more, possible lenders become worried since they are more concerned about the govt's ability to pay back its debts. In order to attract them, the govt offers a higher rate of interest (called the yield) on its bonds.

This might attract foreign investors if the bonds are thought by them to be a good mixture of reward compared to risk. In such a case demand for the currency would increase, causing an appreciation.

However, at the moment no-one wants to buy Greek govt bonds, even though, for example, the yields on 2 year bonds are 28.24%!!!

No 209: tutor2u prediction of key areas for Module 4

2011-06-21T08:01:00.000+01:00

THIS morning tutor2u contains a prediction of possible contexts that could turn up in the exam:

The consequences for the UK economy should the US economy experience a double-dip recession

The economic consequences for the UK of natural disasters such as flood, drought, tsunami (external shocks) and economics of global price volatility

The fast-changing role of the Chinese economy and its implications for the UK

The impact on the UK economy of major instability of the euro

The impact on the UK economy of the newer membership of the EU

This link connects to the tutor2u post, which also contains links to presentations about the above topics and exam advice.

tutor2umodule4advice

On exam advice, this is what they say about ending your essay:

A conclusion is essential and should not just repeat earlier points.
A supported final judgement is a criterion in the Level 5 mark band (i.e. to get 22+)
Leave yourself 4-5 minutes for a final judgement of 5-6 lines. This is time proportionately well spent. Try to incorporate a new idea, e.g. how a policy may impact on different parties; how the policy may have different short v long run effects.

No 208: A useful TV programme

2011-06-19T10:16:00.003+01:00

IF you need a break from revising, there is a useful TV programme being shown tomorrow (Monday 20th) on BBC2 at 9 o'clock.

It is now available on BBC iplayer:

http://www.bbc.co.uk/iplayer/episode/b0125v5h/Made_in_Britain_Episode_1/

"Made in Britain"

Episode 1

Who says we don't make anything any more? In the first of a three-part series on how Britain pays its way in the world, Evan Davis busts the myths that we were wrong to let so much of our manufacturing go abroad, and that we have become a nation of shopkeepers, bankers and estate agents.
As he flies in the world's most revolutionary jet and drives one of the world's fastest supercars, he discovers Britain still makes a lot it can be proud of. But post crash, he asks is it enough to meet the country's bills.

No 207: A few ideas about Module 4

2011-06-17T22:00:00.000+01:00

ONE of my students has just e-mailed me to ask whether I have any ideas about topics for the Module 4 exam. I thought it might be useful for all of you to see my reply:

Dear (student), 

A number of us teachers think that issues relating to government  borrowing and budget   deficit (what the newspapers call "sovereign debt")  may come up. It might be a good idea to read about what is happening at  the moment with regard to Greece and its debts.

In addition, Mr Bowen thinks the topic of "rebalancing" may come up.  This means the shifting of an economy from one area to another in order  to improve its performance: e.g. from relying on domestic demand to  expanding exports, from one particular industrial  specialisation to another, from producing goods to producing services,  etc..

As always though, these are just guesses so don't neglect other areas of  the syllabus. On Monday I am going to send everyone a list of the key  areas of Module 4 compared to Module 2 so you can check you have covered  all the main areas in your revision.

I hope the Module 3 exam went ok today. If you have time to write back, I'd like to hear about your thoughts regarding the exam.

Please e-mail me if you have further questions and please come along to lunch next Friday!

Best wishes,

Mr Spottiswoode

 In addition here are some pictures that might help you.... 

No 206: Some last minute stories of interest

2011-06-16T12:41:00.000+01:00

HI there! Hope your revision is going well!

Here are some last minute stories before the exams that might be worth reading.

1) Chancellor announces new banking regulations and sale of bank shares
New regulations are going to be introduced to force banks to "ring fence" (separate) the retail and invstment parts of their organisation. The government is also planning to sell the shares in Northern Rock that were bought during the Credit Crunch, thereby privatising it.
http://www.bbc.co.uk/news/business-13770746

http://www.bbc.co.uk/news/business-13783765

2) MS fine
Microsoft has been fined £178 million by the US courts for using a patented piece of code in its Microsoft Word software.
http://uk.news.yahoo.com/microsoft-must-pay-copyright-cash-084855404.html

3) Worlds most valuable currency

It's called the "bitcoin". Have you heard of it?
http://uk.finance.yahoo.com/news/The-world-most-valuable-yahoofinanceuk-945291950.html

4) China inflation
Inflation in China is set to rise to 6% next month. This is first time since China has been the second largest economy in the world that it has experienced sustained infaltionary pressure. How will this effect the global economy?
http://uk.news.yahoo.com/china-inflation-may-top-6-percent-june-expert-044616876.html

No 205: North Korean TV produces happiness index

2011-06-08T08:51:00.002+01:00

No 204: Key issues and stats for macroeconomics

2011-05-26T12:17:00.001+01:00

THE table below summarises the important economic indicators and the most important current issues about them.

	Now	B4	Current Issue(s)
Economic Growth	0.5% (Q1 2011)	-0.5% (Q4 2010)	2011 total growth forecast to be 1.4% - is this sign of a recovery?
Inflation	4.5% (CPI April)	4.0% (CPI March)	Should interest rates be raised to control inflation, or will this endanger recovery?
Unemployment	7.7% (Q1 2011)	7.8% (Q4 2010)	Will government job cuts be replaced by private sector jobs? 20% of 16-25 year olds are unemployed.
Current Account	-2.9% (of GDP Q4 2010)	-2.4% (of GDP Q3 2010)	Can exports (low exchange rate / manufacturing) help lead the recovery?

No 203: Some very useful last minute resources

2011-05-26T11:44:00.000+01:00

HERE are two very useful resources for you to look at before the Module 2 exam tomorrow, both from tutor2u.

This links to a post which talks about how important it is to provide some context in your answer. That is, to connect your general economic analysis with some current events in the UK economy.

Advice on use of context

As you should all know, the basic economic background in the UK at the moment is that we are just about starting a recovery after a very deep recession, although it is uncertain how quickly the situation will improve.

The next link below is about tutor2u's prediction for the exam. They think that inflation may feature in the exam tomorrow, since it has not in recent exams and the rate of inflation is very high at the moment.

What you should revise about inflation

Good luck tomorrow and remember......

No 202: Revision notes on unemployment

2011-05-23T15:08:00.000+01:00

THIS links to a post on Tutor2u which briefly summarises all the main information on unemployment for both the AS and A2 exams:

tutor2u unemployment notes

Hope you enjoy! Hope you're enjoying revision and exams......

If you need some relief, watch this video:

http://uk.news.yahoo.com/diet-coke-and-mentos-stunt-goes-wrong.html

No 201: Slight fall in unemployment (of one type)

2011-05-19T13:00:00.004+01:00

UK unemployment (labour force survey measure) has fallen by 36,000 to 2,46 million.

This is over the 1st quarter of 2011. The percentage rate of unemployment is now 7.7%, down from the previous figure of 7.8%.

However, the rate of unemployment among 16-24 year olds is still very high - 20%.

Also, there was a rise in the Claimant count by 12,400 in April up to 1.47 million. This is explained by a movement of people from economically inactive categories such as those on sickness benefit and income support, on to unemployment benefit.

No 200!!!!!!!!!!!!!!!!!!! Oh dear, inflation

2011-05-18T08:51:00.000+01:00

CPI inflation rose to 4.5% in April, compared to 4% in March. This was a surprisingly big increase.

(Note: this means prices were 4.5% higher in April 2011 compared to April 2010.)

The rise is blamed on increasing transport costs and rising prices for alcohol and tobacco. In his letter of explanation for the continued failure of inflation to meet the Bank of England target, Mervyn King said it was also due to the "increase in VAT to 20% in January, higher energy prices and increases in import prices".

On the other hand, RPI inflation fell a little from 5.3% to 5.2%, indicating some weakness in the housing market.

Read more about it here: http://www.bbc.co.uk/news/business-13421614

No 199: Useful revision presentations from Tutor2u

2011-05-17T08:51:00.001+01:00

HERE are links to the Tutor2u revision presentations.

First, this link will take you to AS Micro (Module 1):

http://www.tutor2u.net/blog/index.php/economics/comments/as-micro-revision-resources-collated/

Second, this link will take you to AS Macro (Module 2):

http://www.tutor2u.net/blog/index.php/economics/comments/as-macro-revision-resources-collated/

No 198: Are you the 10,00th?

2011-05-09T15:13:00.000+01:00

WE are very near to having the 10,000th visitor.

If you are the 10,000th, contact me or or the blog with some evidence of this - like a screenshot - and I'll organise some kind of prize!

No 197: ESSENTIAL Presentation about the UK Economy

2011-04-22T12:57:00.000+01:00

THIS links to a tutor2u presentation about the current UK economic situation:

http://www.tutor2u.net/economics/presentations/ukeconomymay2011/player.html

This presentation has 75 slides (!) but don't be scared - it really is all worth looking through.

No 195: Unemployment in Selected Countries 2005-2011

2011-03-22T14:15:00.005Z

To view this graph, please install Adobe Flash Player.

No 194: Spot of Economics' Economics News

2011-03-13T21:06:00.002Z

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

GoAnimate.com: Economics news 1st march by spottygao

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

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

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

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

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

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

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

No 193: Internet Buttons - Improved!

2011-03-13T20:05:00.000Z

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

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

You should then see something like this:

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

BLUE is for Economics and Business News.

GREEN is for Economics Blogs.

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

ORANGE is for sites with Economics Revision Materials.

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

No 192: Some suggested reading from Other Teachers

2011-03-11T11:47:00.000Z

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

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

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

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

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

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

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

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

2011-03-10T17:09:00.000Z

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

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

Government Spending as a Part of Aggregate Demand

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

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

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

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

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

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

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

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

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

2011-03-09T14:37:00.001Z

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

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

To view this graph, please install Adobe Flash Player.

No 189: Very expensive luxuries!!!

2011-03-06T22:50:00.001Z

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

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

The handbag is produced by the House of Mouawad, a jewellry company from Dubai.

One of their previous products was a bra which cost £7 milllion!

(for more about the handbag click here)

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

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

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

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

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

No 188: Pound Dollar Exchange Rate 1976-2010

2011-03-06T12:17:00.004Z

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

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

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

To view this graph, please install Adobe Flash Player.

No 187: AS Summary of Investment

2011-03-04T15:05:00.000Z

DOES exactly what it says on the tin!

Investment as a Part of AD

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

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

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

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

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

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

2011-03-04T15:02:00.000Z

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

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

All information is taken from The Daily Telegraph.

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

1.WHAT IS IPR?

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

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

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

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

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

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

8.WHAT IS PREDATORY PRICING?

9. WHAT IS A PRICE WAR?

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

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

No 185: Summary of PED

2011-03-02T12:56:00.000Z

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

Here is the summary about Price Elasticity of Demand.

Price Elasticity of Demand

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

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

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

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

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

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

No 184: Mr Bowen's Weekly Questions (1)

2011-02-27T21:28:00.000Z

AS you will know if you are in Mr (or Captain?) Bowen's class, he produces a very helpful list of weekly questions relating to those issues you should really be reading and thinking about.

Here is the list for last week. It would be an excellent idea to spend some time testing what you already know, and filling in the gaps in your knowledge if necessary.

Why does inflation pose a great threat to global growth?
Is there anything governments could or should about this threat?
Why does the world economy need "rebalancing"?
What is the PFI? Evaluate its recent performance.
Why has the IMF lowered its growth forecast for the global economy?
Why is the MPC split over the future of UK interest rates?
Argue as a dove then argue as a hawk. Present both arguments and try to resolve them.
"The history of the UK economy since the war seems to indicate that devaluation and inflation have been the policy options that have been mostly unsuccessful. Yet we seem to be doing the same." Comment on this view.
What is causing the current high level of inflation?

To these questions I would add one more:

10. What is happening with Barclays Bank's profits and UK tax payments?

No 183: The Provinces of China Compared to Countries

2011-02-27T08:39:00.000Z

THIS infographic from "The Economist" compares Chinese provinces with similar countries, in terms of GDP, GDP per capita, population and trade.

(To see a similar map about the USA see Post 37).

No 182: World Economic News

2011-02-24T09:46:00.000Z

HERE ARE the latest economic news stories from some of your countries.

Please email me or add a comment if your country is not included here and you find a story of interest to us.

You can also try to answer some of the questions at the end of this post, if you like!

Russian Inflation Problems

Import tariffs on food have been removed, and there is a good chance that the central bank interest rate will be increased, in order to fight inflation. Government spending will also be tightly controlled this year.

The rate of inflation was 8.4% in 2010, but 2.4% just in January alone (which would work out as an annualised rate of more than 25% if repeated throughout 2011). The government inflation target is 7%.

http://www.bbc.co.uk/news/business-12560719

Strong Growth in Hong Kong in 2010
The Hong Kong economy grew by 6.8% in 2010. Much of this was due to the expanding property market, and particularly from people from other areas of China investing their money into Hong Kong.

However, this has raised fears that there is a speculative bubble that might burst with disastrous results not just for Hong Kong but also the rest of China. Increased property prices are also affecting the general price level, leading to fears about rising inflation.

The Hong Kong government is trying to cool down the property market by making sure there is a supply of new land and new houses for sale - difficult in such an crowded place! Other measures include a 20% tax if owners sell a property within 2 years of buying it, and restrictions that stop buyers of luxury properties borrowing more than 50% of the sale price.

http://www.bbc.co.uk/news/business-12548766

Vietnam Government Raises Interest Rates
The Vietnamese government is taking measures to fight inflation, which is currently 12%. The base rate of interest has gone up from 11% to 12%.

There are further fears of increased inflation since electricity prices are due to rise 15% on March 1. There are also criticisms that government itself has contributed to inflation through its devaluation of the currency of 8.5% earlier this month. This was done because of Vietnam's 2010 trade deficit of over $12 billion.

http://www.bloomberg.com/news/2011-02-22/vietnam-premier-to-push-central-bank-to-fight-inflation.html

Bad News and Bad News in Japan
In a surprising development, Japan has posted its first trade deficit in 2 years.
http://www.bbc.co.uk/news/business-12548277

Also this week, Moodys - an agency which rates how safe it thinks different countries' government bonds are - downgraded Japanese government bonds from AA to AA-. This is due to worries about government borrowing and spending. Japan has the world's 2nd highest government debt to GDP ratio, with 196%.

http://www.bbc.co.uk/news/business-12533405

QUESTIONS FOR EXTRA ANALYSIS
1. Why is the Russian government especially worried about the food supply at the moment?
2. Find out more about the Russian government's inflation target: how long has it been 7%? Is there any room for error? What happens if the central bank fail to achieve the target?
3. Find evidence to support the view that the Hong Kong property market is a bubble dangerously close to bursting. Find evidence against this view.
4. Do you think the Hong Kong government's measure will work?
5. Who decides prices of utilities such as electricity in Vietnam?
6. What are the possible positive effects for Vietnam of its currency devaluation?
7. What contributed to Japan's recent trade deficit? Why was it a surprise?
8. Why has government spending and borrowing recently increased again in Japan?

9. From the stories above, what seem to be the common economic problems affecting different countries at the moment?

No 181: What does this picture tell you about current UK unemployment?

2011-02-23T11:21:00.000Z

I SAW this on Saturday, as I was walking to East Croydon college to attend a Maths class:

No 180: BBC TV Show About Ireland

2011-02-22T10:56:00.000Z

LAST NIGHT'S BBC Panaroma show was about the crash of the Irish economy.

The 30 minute show is really worth watching if you have the time. It details how the bubble in the property market burst leading to economic disaster.

Especially interesting is the interview with an Irish property speculator who refuses to apologise for his behaviour (like most Irish politicians). Mind you, he does personally owe 154 million euros due to the property market crash....

Here is the link to the programme on the BBC I Player:
http://www.bbc.co.uk/iplayer/episode/b00z0fyd/Panorama_How_to_Blow_a_Fortune/

Be quick though, it's only available to watch for 12 months!!!

No 179: Name the famous economists

2011-02-07T21:45:00.002Z

BELOW is a screenshot from a quiz about famous economists that can be found here.

Notice the 3 minute time limit.

That means that even Googlers will have to be quick in order to answer in time!

Let us know how long you take to complete it......

No 178: Can you see what is wrong with this picture from Fox News?

2011-02-03T23:33:00.002Z

No 177: The first economist and the first economic question

2011-02-03T23:28:00.000Z

ACCORDING to a book I am currently reading - Dr. Strangelove's Game: A Brief History of Economic Genius - the first person who can be clearly recognised as an economic thinker was Sir William Petty (1623-1687). (This links to a Wikipedia article about him.)

Not the best looking man who ever lived, he was called a "bumptious and somewhat unpleasant man."

One reason why he was so important is that he seems to be the first person to have tred to put a monetary value on everything, with what he called "political arithmatiek". This included human life.

In measuring the value of the labour working on his vast lands in Ireland, he valued the worth of each working man at twenty times his annual income.

Doing this was an important development in the history of human thought. Firstly, it made it "possible to calculate the loss to a nation by deaths, especially in times of war and plague" (Dr Strangelove's Game p.21). In addition, a money value for everything "gave a common denominator against which everything could be measured" (p.22).

The true monetary value of a human life is a question economists are trying to answer even now, centuries later.

Some people are very uncomfortable with the idea of trying to do this.

However, if we believe that governments should take all costs and benefits into account before deciding whether or not to spend money on a project, the possible loss of human life must be included. For example, when deciding to build a road, the possible costs of traffic accidents need to be calculated.

This links to a very simplistic yet fun way of calculating your own worth. As you can see, I have tried it:

(If you try it, you need to make sure you click "scan" at the end to see the results.)

The maximum value of $10 would be achieved, according to the site, if you were a male, 33 years old, from Luxembourg, with a perfect body.

When I tried this again, with all the information the same except being a Mrs. Spottiswoode, instead of Mr, my value had fallen to $4.43. So it seems that a British woman is worth about a third less than a British man.........

Of course, this is fairly primative stuff. It's really just to stimulate discussion I think, so please don't take it too seriously!

However, there are of course serious issues here.

For instance, this article talks about how the Environmental Protection Agency (EPA) of the USA, in 2008 reduced its calculation of the value of an American human life from $7.8 million down to $6.9 million.

Critics of this decision speculated that the agency made the change so the Bush government could avoid tougher regulations on air pollution, water pollution, greenhouse gas emissions, and other environmental problems.

This article talks about valuing a year of human life. Doing this is important in assessing whether medical insurance companies should offer to pay for the cost of a new medical treatment or piece of equipment. Previously, insurance companies calculated that to make a treatment worth its cost, it must guarantee one year of "quality life" for $50,000 or less. However, economists from Stanford University have written a report arguing it should go up to $129,000.

This suggest that by placing too low a value on human life, insurance companies have been avoiding paying for medical treatment that they should have been providing.

It seems then that the issue of the value of human life is as controversial now as it was in Sir William Petty's time.

It also seems that we still very far away from agreeing what that value should be.

No 176: Competition!!!!!!

2011-01-30T23:50:00.003Z

IT'S been a long time since this blog had its last competition, so I thought it was time for a new one. The competition will be an .......................

ECONOMICS VEGETABLES COMPETITION

Here's the story. Last year, a student started talking about

CUCUMBER FIRMS

It took me a while to realise that they meant "incumbent firms" (firms that are already in a particular market when other firms are trying to enter it).

We all thought this was very funny, so when we got to our next topic, this is how I titled the Powerpoint:

TRADE ONIONS

So, to enter the competition, please post suggestions about other economics vegetables.
An interesting book about Economics will be the prize for whoever I think has the funniest suggestion.

No 175: About Loose and Tight Policy

2011-01-23T23:45:00.002Z

AS YOU will know if you took the Module 2 exam on Wednesday, the first question in it asked about "loose" monetary policy.

It occured to me that the terms "tight" and "loose" may not be that familiar to you, since they don't always appear in textbooks.

But then I remembered all of you are of course doing lots of Economics reading, so have looked at this week's Economist........

This extremely relevant article (which you should read and all my students will be reading) starts:

THE script for 2011 had been well rehearsed. The Treasury’s fierce fiscal retrenchment would undoubtedly hurt the economic recovery. But the Bank of England would add balm by maintaining an extraordinarily loose monetary stance. Just three weeks into the new year, however, surging inflation has disrupted the story. The worry is that this could endanger the recovery by forcing a premature tightening in monetary policy.

So exactly what do these terms "loose" and "tight" refer to, and in which situation can they be used appopriately to describe government policy?

The first thing to say is that "loose" policy is also often referred to as "expansionary" policy, and that "tight" policy is often called "deflationary" policy.

The second basic concept is that loose and tight as terms can be used to refer either to monetary policy or fiscal policy.

Imagine a government controls 2 "taps" called a monetary tap and a fiscal tap.

The monetary tap works mainly by controlling credit in the economy through manipulation of interest rates.

The fiscal tap works by alterations in taxation, government spending, and any borrowing it requires.

Both taps influence the amount of demand that flows through the economy, which in turn affects the amount of goods and services produced, and therefore also the levels of profit, wages and jobs.

Here, the government (or in the UK, more accurately the Bank of England) has loosened the Monetary Policy tap. Lower interest rates encourage households and firms to take out credit and then spend it, increasing the flow of demand in the economy.

Here, fiscal policy has been loosened. Taxes have been cut, and/or government spending has been increased. This gives people more money, therefore adding to the flow of demand.

During the Credit Crunch, various factors - lack of bank lending, falling wealth, plunging confidence, lack of profits - all led to the total (or aggregate) level of demand being at an extremely low level.

So, it is generally agreed that the right government action in this situation to use both loose monetary and fiscal policy. It is hoped that the economy can recover from recession by the government causing demand to increase in the economy.

This is the current situation in the UK. The government has decided to tighten fiscal policy.

In its original (Keynesian) form, the idea was that loose fiscal policy in bad times would be paid for with money the government had saved up in the good times. Few governments do that now, meaning that money must be borrowed to pay for it.

However, at certain point, too much government debt endangers the ability of governments to borrow money in the future. This would be a disaster, since government would be unable to pay even for its most essential services such as health care and education.

Therefore, it was decided to tighten the fiscal policy tap. But some economists fear that fiscal policy has been tightened too early, and that this will damage the recovery.

If a recovery becomes a boom, a government will tighten monetary policy also. This is to avoid demand overflowing. If there is demand which is not realised (that is, there are not enough goods and services for everyone who want them), prices shoot up.

The resulting inflation is seen by many economists as an economic problem which can be even worse than unemployment.

There is increasing inflation in the UK at the moment, and this is worrying. However, the cause is not too much demand in the economy. Instead, it is due to rising prices of essential commodities such as food and oil, as well as a rise in VAT (part of the tightening in fiscal policy).

The government could decide to tighten the monetary policy tap to combat this.

However, the fear is that the economy is not strong enough to continue to recover by itself with both tight monetary and tight fiscal policy.

As with most economic policy decisions, it is not so much the policy you use as the time that you decide to use it.

No 174: Current UK Economic Statistics

2011-01-20T16:44:00.001Z

MOST of you in my current classes have moved on to Macroeconomics. One very important piece of knowledge to have is an idea about the current state of the British economy.

So the deal is, I will upate the key economic indicators about the UK, as long as you promise to try and remember some of them for the exams.

DEAL OR NO DEAL?

Deal? Great, here are the current figures:

Economic Growth

Inflation

No 173: Top 10 Economics Stories of 2010

2011-01-05T20:39:00.002Z

CLICK on this link to get to a sideshow from the "Daily Telegraph" of its top 10 economics new stories of 2010.

Here is a list of which stories they have included:

1. Deficit, debt and austerity worries

2. Government debt problems for European countries

3. Currency wars

4. Global imbalances in trade

5. China's continued growth

6. Difficulties with job creation

7. Inflation and interest rate decsisions

8. Problems for the Bank of England's monetary policy

9. The formation of the Office for Budget Responsibility

10. Unpredictable UK growth

These stories will be the starting point of our classes on Macroeconomics this coming term (5 more days of holidays - use them wisely and enjoy - I myself am mostly watching cricket!).

Therefore, please make sure you have a look. There may even be an exciting quiz about them next week.....

If you want more, here is a link to the Telegraph's Top 10 Banking Stories of 2010.

And if you'd like even more, this is a link to "The Week" magazine's Most Newsworthy Dogs of 2010, including the sad story of Target, the war hero dog :,(

No 172: Tutor2u Revision

2011-01-02T11:15:00.002Z

HERE is a link to the Tutor2u website and all of its posts regarding exam revision:

http://www.tutor2u.net/blog/index.php/economics/tagged/tag/revision/

It is worth checking this every few days since new and useful stuff is being put up there regularly.

HAPPY HAPPY HAPPY HAPPY etc etc

2011-01-01T23:01:00.010Z

WELL here we are in 2011 (today is 1 1 11 if you didn't notice, and now it's almost 11.11 o'clock on 1 1 11 so nearly 11 11 1 1 11) and as fits a new year, we are all looking to improve.

And the improvement I want to make in this blog this year is

MORE INVOLVEMENT OF YOU ....... THE READERS

It's lonely hard work producing this blog and it would help me a lot if you could interact just a little more.

The first step you can see below. All future posts will have a "like this" button at the end, for you to click if you enjoyed the particular post and therefore stopping me from further feelings of loneliness and more .

More seriously, it gives me an idea of which types of articles are being well-read and are popular with you.

Go on, give it a try now.

And of course, if you wish to leave comments, that's even more welcome!

POLL MASTER

2011-01-01T20:08:00.000Z

No 171: 2010 in 9 Charts

2010-12-29T22:09:00.001Z

I HAVEN'T before simply just copied an article straight into this blog. However, this recent article from "The Economist" is so informative, so useful, that I believe EVERYONE of you should try to read it, even though it is fairly advanced in places.

CHARTS OF 2010 - A YEAR IN NINE PICTURES

THE global property bust that pulled the world into recession in 2008 began to lift in 2010. House prices turned up in Britain and stabilised in America (chart 1) but slid further in Spain. The process of deleveraging kept rich-world inflation subdued (chart 2) while robust demand and loose monetary policy let it accelerate in India and China. By late 2010 output and employment had turned up in most rich countries but not enough to regain pre-crisis levels (chart 3).

Bowing to American pressure, China allowed the yuan to rise slightly (chart 4); higher inflation meant that in real terms it rose considerably more. Japan watched in alarm as a rising yen (chart 5) threatened its export-led recovery. Europe trembled as its sovereign-debt crisis undermined the euro.

Rich-world budgets remained deeply in deficit but at least those gaps generally shrank, most of all in countries, like Greece, undergoing austerity (chart 6).

Sadly, austerity did not provide the hoped-for relief: peripheral European government-bond yields continued to rise relative to Germany’s (chart 7).

Bonds’ best days may be over everywhere. In emerging markets and America bond prices increased through most of 2010 (chart 8) then fell as America’s economy sprang to life and investors flocked to equities. Commodities trounced both stocks and bonds (chart 9). Bulls attribute this to global growth, especially in the emerging world; bears cite a desire for inflation hedges. The tension between them will drive markets in 2011.

No 170: GDP Forecasts for 2011

2010-12-29T21:50:00.000Z

FROM "The Economist".....

No 168: Fun with Google Ngram

2010-12-28T21:10:00.002Z

THE tools on "Google Labs" are really cool. For example, Google Ngram allows a user to search the millions of books scanned into Google Books, to find how often different words or names have appeared in the past.

This can be very interesting for us economists.

For instance, this is what happens if you search using "inflation" and "unemployment":

Let's be clear what this graph shows: how often books contain the words "inflation" and "unemployment" between 1800 and 2008.

Firstly, it is clear that few writers talked about either inflation or unemployment until about 1870. This is probably because early Economics was almost universally concerned with microeconomics.

Inflation is the first of the 2 terms to start to be written about, but it is overtaken by unemployment in about 1905. Both of the terms, but especially unemployment, show a huge increase during the Great Depression of the 1920s and 1930s.

After World War 2, the incidence of inflation increases and that of unemployment falls, perhaps due to the Phillips' Curve and its emphasis of the correlation between the two. In the 1970s, inflation leaps up to the same level as unemployment, at the same time as the world economic crisis of the time which saw high levels of both.

The peak for both came during the recession of the early 1980s.

Since then, the frequency drops, possibly due to the relatively good economic climate until the Credit Crunch. It will be interesting to see how it has increased during our current economic crisis, in a few years when the data is available.

Here are some more Ngram graphs:

Not quite sure about Karl Marx's popularity around 1700, about 120 years before he was born! I guess this also shows how Adam Smith's has continued to be a very important figure, even when Marx was at his most influential.

Two more - war and peace first:

How about tea and coffee:

Come on, then, why don't you have a go? Just go to Google Ngram and then tell us about the graph you made.

(Technical note: choosing the option to search through "English One Million" gives a more even sample over the different years.)

No 167: Three More Student Stories

2010-12-09T12:54:00.001Z

SO we're now on to the third set of story summaries written by A2 students. Once again I am impressed by the high standard of English and Economics shown in this work. Well done!

However, I teach 17 A2 students and have only received 11 stories...... oh dear some of you may be in trouble!

DEMONSTRATIONS AGAINST TAX AVOIDANCE by Kana Maniwa

On December 4th, in some cities in the UK such as London and Brighton, there were demonstrations against tax avoidance of the owner of Topshop, Sir Phillip Green. They criticise not only Sir Green but also the government itself by saying "If you want to sell your products, pay your tax" and "Nick Clegg, shame on you, shame on you for turning blue". This event gives warning and criticisms of the government regulation over tax.

http://www.dailymail.co.uk/news/article-1335632/Sir-Philip-Greens-flagship-Topshop-closes-protests-taxes-cause-mayhem.html?ITO=1490

UK MANUFACTURING 'POWERING AHEAD' by Alan Chan

The revival of the UK manufacturing sector is due to the strong demand from overseas consumers and a big improvement in productivity, which gives a big hand to the country's recovery as it currently accounts for 13% of the UK's total economic output. However, to maintain the revival of the sector, government should also play a role in it,such as put in more spending,or make some looser policies to attract the firms to make even better performance in certain sectors.

http://www.bbc.co.uk/news/business-11921894

SNOW CAUSES DISTRIBUTION PROBLEMS by Rauan

Due to weather conditions the Royal Mail is currently not providing its guaranteed next day delivery. Also Amazon one of the retailers said that items might be delayed. Moreover some of the petrol stations had problems in getting fuel into certain areas, especially in Scotland. On the other hand, because there are fewer vehicles on the road during these days, there is less demand for petrol.

A spokesman for the Department of Energy and Climate change said that fuel supply companies are doing their best in order to supply road transport fuels, however in some parts of the UK, weather conditions are causing problems.

In addition the Independent Retailers Association stated that in Scotland and East England many independent petrol retailers are in danger of running out of petrol and diesel. Those filling stations that are in rural areas are most vulnerable.

Tesco, one of the UK’s largest petrol retailers said that all their tankers are operating and that there are no stations closing down or reporting shortages. Together with other supermarkets Tesco had no problems with food supply shortages.

However, current weather conditions affect positively on other businesses. For example Marks and Spencer reported that demand for thermal clothing in past weeks had grown by 121%. Furthermore Asda sold about 100,000 de-icers for car windows.

So according to Howard Archer early changes in weather had impact mostly on retailers.

ttp://www.bbc.co.uk/news/business-11904765

No 166: Next Four Student Stories

2010-12-08T12:55:00.000Z

FOUR more excellent news story summaries from A2 students. Good work!

AMERICA'S JOBLESS RECOVERY by Abdul Abdulrahim

Nearly in every sector the U.S. seems to be picking up pace, spending has been become strong, and the latest figures on pending home sales suggest that even housing markets may be coming back from their deep slump.

The growth seems to be everywhere except one of the key areas —labour markets. Employment in America turned in a surprisingly poor performance in November, indicating that recovery is not creating enough jobs.

The unemployment rate rose to 9.8%, its highest level since April and close to the 10.1% recession peak. At 15.1m, the number of unemployed workers rose back to its April high (though some of this increase was due to new entrants to the labour force).

Many of these workers are now rely on unemployment benefits. Congress has yet to reauthorise the emergency benefits package, as it has done so many times through the recession. Some 2m jobless workers may lose benefits by the end of 2010, and perhaps 4m or more will lose them by April (The Economist).

The November figures may be revised up in future months to show a better performance (like the previous months). The U.S. labour markets has yet to generate job growth sufficient to bring down the unemployment rate of the country. However the pace of recovery has been improving. All the same, policymakers in Washington considering the extension of unemployment benefits and tax cuts should pay attention to the obvious weakness in labour markets. They can and should make sure that November's number remains an anomaly(out of what is expected).

(http://www.economist.com/blogs/freeexchange/2010/12/americas_jobless_recovery&fsrc=nwl)

OIL PRICES REACH POST-CRISIS TWO-YEAR HIGH by Eunice Aw

Oil prices reached a record high since the financial crisis in 2008.

The factors that contributed to this rise in oil prices included an increasing demand for oil due to the global economic recovery and the cold weather.

The rising demand is also due to the weakening of the US dollar. The weak US currency makes oil less expensive as it increases the purchasing power of currencies that gain in value against the dollar. Hence, the demand for oil increases. However, the producers may restrict the supply of oil as they are earning less profit from the US dollar. This results in a rise in oil prices.

http://www.bbc.co.uk/news/business-11917152

SPANISH AIRPORTS FACING POST-STRIKE BACKLOG by Dheeya Rizmie

The unexpected, unofficial strike of air traffic controllers in Spain has lead to the forced cancellations of numerous flights, both departing and arriving in Spain, with more than 250,000 people being affected. The strike came after the government decided to introduce a period of austerity (in order to reduce their budget deficit) which may severely affect the wages of controllers. This decision came after an ongoing dispute acout their work hours.

http://www.bbc.co.uk/news/world-europe-11921539

FUTURE UK GROWTH by Valerija Artemjeva

The economy will grow by less than expected in 2011(the UK's GDP was predicted to be 2.2% but now the it is predicited to be 1.9%), but growth in 2012 will be better than predicted, the British Chambers of Commerce forecasts. It upgraded its GDP growth forecasts for 2012 from 1.8% to 2.1% - but that was still significantly lower than the OBR's 2.6% estimate.

http://www.bbc.co.uk/news/uk-11920548

No 165: World Clock

2010-12-07T14:06:00.000Z

HERE is a screenshot of the "World Clock":

As you can see (but not too clearly, trying a different screenshot app....) the clock shows you information about different stats about the whole world: births, deaths, prison growth, car production.

However, to get the real fun out of it, you need to actually watch the clock in live time: click here to get to it.

Right, I'm going to watch the clock for the next 60 seconds and see what happens in the world....

Ok, I'm back. In the world in the last 60 seconds there was:

a 147 person growth in world population due to
256 births minus
109 deaths of which
22 were because of cardiovascular problems, 2 from traffic accidents, 1 from poisonings and also
1 illegal immigrant entered the USA
2 couples got divorced in the USA while
88 abortions took place across the world
25 hectares of forest were lost
57,851 barrels of oil were produced and also
69 cars, 208 bicycles and 161 computers.

I'll let you into a secret: the ends of term are always stressful times for teachers - topics to finish in class, tests to set and mark, reports to write - and in such times is good to be reminded of the incredible restless relentless busy-ness of the crazy planet we live upon, and how our own problems and stress are just an insiginificant molecule in all of it.

Wow, got all of a bit philosophical there, apologies!

No 164: First Four Student Stories

2010-12-06T19:43:00.006Z

SO HERE are the first of the summaries written by my A2 students about recent economic stories. Good work everyone!

EUROPEAN COUNTRIES AND THE EURO by Queena Wong

Countries in Europe like Spain, Italy, Portugal and Ireland are still in recession. Confidence in these countries decreased as the cost of insuring government debts rose sharply. The cost of insuring indicates the high risks of government repayments. This has led to the Euro falling to a 10-week low.

(See

http://www.guardian.co.uk/business/2010/nov/30/eurozone-rocked-by-debt-crisis )

IS HAPPINESS ALL ABOUT MONEY? by Yana Geshko

In the article ideas about human well-being and income are discussed. Should government put people's happiness above people's prosperity as the aim that drives their policy- making decisions? Though peoples' answers don't show that money is everything, they usually make a decision relying on the possibility to save or earn money.

(See : http://www.economist.com/node/17578888 )

CAMERON'S HAPPINESS INDEX by Iris

David Cameron has asked the Office of National Statistics to measure the country's "general well-being" in terms of what is known as the index of happiness. The government is intending to use this statistical information when it comes to policy making.However,this rather creative new strategy is not favoured by the majority of people who is concerned about the feasibility of this,because it is not only difficult to define "happiness",but is also time-consuming to collect data from a large and representative sample.

http://www.economist.com/economics/by-invitation/questions/should_governments_pursue_happiness_rather_economic_growth

CADBURY AGREES TO KRAFT'S TAKEOVER BID by Rachel Yoo

Cadbury will benefit from the supply chain of a larger company.

For example, its addition to the Kraft will allow the combined company to have an even a broader reach around the world.
Also, there is a big chance to generate cost savings.

However as Cadbury, the 186-year-old British company, was acquired by an American company there were public protests, asking to “Keep Cadbury British”.

http://stocks.investopedia.com/stock-analysis/2010/What-Happens-When-Kraft-And-Cadbury-Merge-KFT-CBY-WEN-MCD-TGT0127.aspx?partner=tickerspy

No 162: Some Interesting Numbers from "Private Eye"

2010-12-03T10:50:00.001Z

I DON'T have a particular newspaper that I read every day. However, I do make sure that every week I read "The Economist" (which hopefully you have heard of already), and "Private Eye".

You can probably tell from this week's cover the kind of magazine the Private Eye is....

In my opinion, satirical magazines like this, who watch very carefully what government and other powerful people do, are extremely important. This may be why usually one of the first acts of a dictator is to close down these kinds of publications. Plus, Private Eye is funny!

However, I am not the only person who believes in the importance of having a strong opposition to the government.

As reported in last weeks "Economist":

"In a video shown on state television, President Dmitry Medvedev said that Russia’s political system was showing signs of “stagnation”, and that the lack of serious opposition meant that Russia’s ruling party, United Russia, was in danger of “bronzing over”."

Now I don't want to say too much about Russian politics, since it not something I know a lot about. However, it does seem to me a bit strange that one of the leaders of a political party which has been well known for trying to silence opposition, is now complaining because now there is no opposition.......

In any case, back to "Private Eye". One feature I like in it is called "Number Crunching", and here are a few examples:

No 161: Strange Story 3 - The Irish Government Cheese Plan

2010-11-27T18:44:00.002Z

THE world economy grew more in the 1990s than in any other time in human history.

For example, between 1995 and 1997, the world's GDP grew by more than during the 10,000 years from 8100 BC to 1900!!!

Of all the countries of the EU, the Republic of Ireland gained the most. Unemployment fell from over 15% to 5%. GDP growth averaged 7% each year from 1994 to 2004. GDP per capita rose from 66% of the EU average in 1986, to 111% of EU average in 1999 (significantly higher than in the UK).

The government policies that seemed to have led to this success were deregulation, encouragement of foreign investment, and very low corporation tax rates of 11% (whereas in the USA, it is 35%)

However, as the graph below here shows, the fall of Ireland during the Credit Crunch has been just as spectacular.

In all, GDP fell by 13.5% in 18 months.

The average wealth of a household fell from E95,000 in 2006, to E51,00.

The Irish banks needed billions of euros of help from the government.

In 2010, the government will borrow funds equivalent to 32% of the whole country's production.

In recent weeks, the country's situation has got so bad that the Irish government has been forced to accept 85 billion Euros of loans from the EU and the IMF.

At the same time, they announced 10 billion Euros of cuts in government spending, and 5 billion in tax rises.

Understandably, the people of Ireland are angry, as you can see in this picture:

But, have no fear people of Ireland, because your government has thought of a plan, and although it may not solve all the problems straight away, it is will surely make everyone feel much better. The plan is....

CHEESE!

That's right, the Irish government has bought a very big piece of cheese and every household in the country will get some of it!

Brendan Smith, the agriculture minister, said the plan was "an important means of contributing towards the well-being of the most deprived citizens in the [EU] community".

However, the plan has made some Irish people extremely angry:

One caller to a radio show said: "Have they taken leave of their senses? It's not cheese that people who have lost their jobs that people are worried about, it's about how they're going to tell their children or grandchildren that Santa has very little money."

"What are they going to tell their children and grandchildren: that Santa has cheese instead?"

Another said: "This is just crackers. The scheme is full of holes. This is the last straw - it's really grated on the whole community."

Further Reading

Independent news story about the cheese

BBC story about the recent loans to Ireland

No 160: California Against The World

2010-11-26T15:13:00.007Z

HERE's a very nice infographic, helping us to remember just how important the US economy is to all of the rest of us.

Before we see it, just a reminder of the biggest economies in the world:

1 United States $ 14,120,000,000,000 2009 est.
2 China $ 8,818,000,000,000 2009 est.
3 Japan $ 4,149,000,000,000 2009 est.
4 India $ 3,680,000,000,000 2009 est.

The important point here is not that USA IS NUMBER 1!!!!! (As American like to say.)

It is more that the US economy is about the same size as China's, Japan's and India's added together.

No wonder that the Credit Crunch proved the old proverb still seems to be true: "If the USA sneezes, the rest of the world catches cold."
In fact, as the infographic shows, even individual states of the US have enormous economic power:

Click this to see it: California Against the World Infographic

You may also like to look at one of my favourite ever maps, showing US states and the countries whom have an equivalent size to them - click on the link below:

Post No 37: Your country compared to US states

No 159: Strange Story 2 - Cyberspace Leisure Club Sold For Over $600,000

2010-11-15T23:59:00.003Z

LAST week saw the sale of the most expensive part of a video game ever.

As this story reports, a player of the online game "Entropia" bought an asteriod in the game for $100,000 last year. He converted it into a virtual leisure club, then sold it last week for $635,000.

This are some pictures of what someone has just bought, "Club Neverdie":

A great place to have a night out while you're having a night in, you could say.

According to this page about the club, there are over 1000 apartments, 5 clubs, 20 domes for hunting, a place to go mining (!), and a mall featuring 66 shops.

Here's the promotional video:

What do you think, was it a good investment to pay $635,000 for Club Neverdie?

Special Post: Students' Oligopoly Presentations

2010-11-15T18:35:00.016Z

THIS past week my A2 classes have been making presentations on different topics about oligopoly.

Below are some of the presentations, which all show an excellent level of hard work and understanding. Great stuff everyone!

NON-PRICE COMPETITION IN MONOPLY by Grace Xu

Non Price Competition

(Full screen URL: http://www.scribd.com/full/44918270?access_key=key-1lqz4io0t68ugrf7ocvv )

OTHER METHODS OF PRICING by Kana Maniwa

Kana Other Price

(Full screen URL: http://www.scribd.com/full/44918874?access_key=key-1wyepd99pargmvqv0ywm)

THE PRISONERS' DILEMMA by Ira Che Ghani and Abdul Addulrahim

Prisoner's Dilemma

(Full screen URL: http://www.scribd.com/full/44919133?access_key=key-1m3zbkrlulaxvfhrgu02 )

Link to game show illustrating game theory in action
http://www.youtube.com/watch?v=p3Uos2fzIJ0

No 158: Strange Story 1 - No more wizards in Russia (unless they get a license

2010-11-14T10:01:00.003Z

IMAGINE this situation. Two men come up to you claiming to be wizards. They say that if you give them all your money, they will take it away and then use their skills in magic to triple the value of your cash. So if you gave them, for example, US$35,000, they would convert it into US$105,000.

Would you give them your money?

Well, as this story reports, and in the video below, such an event recently happened in Moscow.

It appears that similar situations have led the Russian parliament to make a law to control the "country's flourishing industry of self-styled wizards and psychic healers by banning advertising and requiring them to acquire licenses".

This makes me wonder: what do you have to do to get a license to be a wizard?

Maybe some kind of competition...

No 157: Newspaper questions for Wednesday 10 November

2010-11-10T15:02:00.001Z

Page 6 - "Train fare rises being used to ease peak-time congestion"
Do you think the rises in fares will ease peak-time congestion on trains?

Page 11 - "Move to Biofuels Will Add Carbon"
Biofuels have been praised as providing a solution to the use of petrol. Does it seem to be a good solution?

Page 41: "Forecasters predict oil will reach $200 a barrel"
Why?

Page 42: "Gold hits record high of $1,420 per ounce"
Why?

Page 42: "Trade deficit narrows slightly"
Why?

No 156: Newspaper Stories for Tuesday 9th November

2010-11-09T13:48:00.000Z

PAGE 10: "Cameron Enlists Fashion Leaders to Court Chinese"
Why does the British government hope 'China rebalances its economy' by raising workers' wages?

Page 18: "Smokers Not Quitting"
What does the article suggest is a more important influence on smokers than the price of cigarettes?

Page 19: "Web Giants at Loggerheads Over Sharing Users' Data"
Do you think it would be better for Facebook and Google to cooperate or compete?

Page 43: "Sky Gives a Hint of Its Power"
Give an argument in favour of the UK government stopping News Corp taking over the rest of BSkyB.

Page 45: "Britain Avoids Double Dip, Says OECD"
What does the OECD think will happen to the UK economy?

No 155: Newspaper questions for Monday 8th November

2010-11-08T12:56:00.001Z

FOR anyone outside my A2 classes, every Monday, Tuesday and Wednesday we have been reading stories from the new 20p "i" newspaper.

(Here is a BBC news report about the paper if you are interested.)

Here are the stories and questions for today:

Page 3: "Internet Biggest Browers (Diagram)"
What do the diagrams suggest about the market structure for internet browsers?

Page 4: "Channel 4 Reporter Exposes British Sweatshops Supplying Big Retailers"
Make an argument in favour of British companies using sweatshops such as these.

Page 4: "Archbishop Warns on Jobless Plan"
Do you support the government's idea of unpaid manual labour for the long-term unemployed?

Page 41: "Falling House Prices Tempt First-Timers"
Are falling house prices good or bad for the economy?

No 154: The Spending Review in 2 minutes

2010-10-21T09:42:00.000+01:00

SORRY, no time at the moment to offer detailed comments about the spending cuts (see post 151).

However, here is a list of the main measures:

£81bn cut from public spending over four years
19% average departmental cuts - less than the 25% expected
£7bn extra welfare cuts, including changes to incapacity, housing benefit and tax credits
£1.8bn increase in public sector pension employee contributions by 2014
Rise in state pension age brought forward
7% cut for local councils from April next year
Permanent bank levy
Rail fares to rise 3% above inflation from 2012

And a short video....

No 153: If you think your classes at Bellerbys are boring, it could be worse....

2010-10-20T14:51:00.000+01:00

No 152: Funny Videos About The Recession

2010-10-19T10:35:00.000+01:00

FIRST of all, these Australian comedians discuss the debt problems of European Union countries:

Next, here are some British economies explaining financial markets and the credit crunch and why the banks needed to saved:

This (http://www.youtube.com/watch?v=mzJmTCYmo9g) links to many more Bird and Fortune videos.

No 151: Here Come The Cuts........

2010-10-18T22:14:00.001+01:00

WEDNESDAY will see the UK Government's "Comprehensive Spending Review".

This will possibly shape the future of the UK economy for the next 5 or 10 years.

To find out all about it, download then print out this document and follow the instructions:

Download web challenge

------------------------------------------------------------------------------------------------------------------
Introduction
The UK Government has spent £1 trillion on helping the economy, and more particularly the banks, during the credit crunch.

The Conservative-Lib Dem coalition government believes that spending cuts need to be made so that government borrowing can be seriously reduced. Apart from health care which has been "ring-fenced" (protected against cuts), they are asking each department to cut somewhere between 20-25% from their spending.

On Wednesday 20th October, Chancellor George Osborne will announce the details. Nobody is sure what will be cut. However, estimates say about 600,000 government workers will lose their jobs over the next few years.

What Would You Cut....?

From the BBC, this allows you to play around with diffferent possible government spending areas that could be cut:

http://www.bbc.co.uk/news/business-11069101

Stephanie Flanders video

The BBC's Economic Correspondent gives her summary of the issues raised by the Spending Review:

http://www.bbc.co.uk/news/business-11180768

What would you save and cut?

Members of the UK population give their opinions:

http://www.bbc.co.uk/news/11503212

Further Information

Videos of 2 famous economists and their opinions

Will Hutton - We Deserve A Fair Society

Phillip Aldrick - Cuts Are Austerity-Lite

Cut Or Spend - What the IMF Really Thinks

No 150: Help with New Economics Words

2010-10-13T13:02:00.000+01:00

ONE difficulty with studying economics is that there are so many new words to learn.

It is sometimes useful then, to have access to dictionaries which give you the meaning of these words.

There are many available on the internet. Some start with basic economics terms, others are for advanced students.

My advice if you don't know a word is look in more than one site, because you might find the way a word is described in one place is easier for you to understand than in another.

Here is a guide to some economic glossaries I think are useful:

1) Bized economics glossary - this is good place to start since it is written for A-level students.

2) The Economist magazine's glossary - from, of course, the best magazine in the world, which, of course, you are all reading every week. It is written for eductaed people who may not have studied economics, so should be quite easy for you to understand.....

3) AMOS web glossary - size is the advantage of this one, with over 3000 economics terms discussed. It is from the USA, so beware of some words which are different from those we use in the UK.

4) Dr T's Economic Glossary - written by a university teacher, this uses advanced language to describe the economic ideas you may already know. Better for A2 students than AS.

5) John B. Taylor's Principles of Macroeconomics - very advanced;good for those of you who really want to challenge your understanding.

6) The Concise Encyclopedia of Economics - as the title suggests, not so much a dictionary as a series of short essays. Very interesting, but be aware that there is a bias to the writers of these essays - they are Austrian School economists (put very simply, very much in favour of the free market and against government).

If you want to buy an economics dictionary, this old one is still one of the most excellent available. I have a copy so if you'd like to have a look, just ask.....

http://www.amazon.co.uk/Everymans-Dictionary-Economics-Collected-Arthur/dp/0865975523/ref=sr_1_5?ie=UTF8&s=books&qid=1286971170&sr=1-5

No 149: Of billions, trillions and debts

2010-10-06T11:17:00.003+01:00

I'VE been looking for some ways to visualise the huge amounts of money that governments owe.

Remember that "budget deficit" refers to the money a government borrows over a year, wheareas "national debt" is all of the money a government owes from borrowing in the past.

I've already posted about the UK debt clock (see Post 67 and http://www.debtbombshell.com/) and the Billionpoundagram visualisation (see Post 67 and billion-pound-gram).

Here's an article about current UK government borrowing: uk record borrowing. This is the key information:

"TheUK's budget deficit rose to the highest level since at least 1993 reaching 15.3 billion pounds in August....

"...economists expect the deficit to be .... 149 billion pounds in 2010."

This sounds a lot but it's hard to imagine. Economists usually compare these big numbers with the total value of all production in the country. On this measure, the deficit for 2010 will be equivalent to about 10% of UK GDP. In other words, the government borrowing for this year will be the same value as 10% of all the goods and services made in Britain.

However, a billion of something is hard for us to imagine. This video may help....

Trying to find visualisations of a billion then led me to trying to do the same about a trillion. Whenever I hear the word "trillion", I often think about the US national debt, currently about $13 trillion!

Here is the debt clock for the USA: http://babylontoday.com/national_debt_clock.htm.

I am now going to pause writing this blog and see how long the clock will take to increase by $1 million.....

Right, back again, it took 22 seconds. Therefore, US national debt is increasing by $1 million every 22 seconds!

Much of this is interest payments, calculated to be around $383 billion this year. Of course, this leads to an enormous opportunity cost where money that could have been spent on providing government goods and services is spent on interest payments. But also remember that if a government doesn't pay its debts (known as "defaulting") it won't be able to borrow money in the future, or if it can, it will be at even higher levels of interest. And then it won't be able to pay back the interest so they can borrow more money to make the interest payments.......

There is a clock in New York which shows the US National Debt. A couple of years ago there was a problem with it:

If a billion is hard to imagine, a trillion must be even more difficult.

These 2 visualisations may help:

One last number to draw attention to: the total cost of the government spending caused by the credit crunch so far has been .... $10,000,000,000,000 (10 trillion).

Although actually this is only up July 2009 (see this BBC article).

Recently, some economists have been arguing that the Bank of England needs to put even more money into the economy to make sure we do not fall back into recession (time for more QE?).

No 148: Possible reading for students wanting to study economics at university

2010-09-27T11:58:00.003+01:00

SOME students have been asking me about economics books they can read in order to help their university applications.

Here are some recommendations:

1. Predictably Irrational by Dan Ariely

This is a book about "behaviourial economics", the use of experiments and theories from psychology to better understand economic behaviour. This book challenges traditional economic ideas about how we make economic decisions. It's also very funny!

2. Ship of Fools by Fintan O'Toole

This book discusses the rise and fall of the Irish economy over the 1990s and 2000s. The country was praised around the world as the best example of how deregulation, low taxes and foreign investment could led to very high growth rates. Before it all went spectacularly wrong during the Credit Crunch. It's GDP has fallen by 14% between 2008 to 2010, and has the world's highest debt to other countries - equivalent to 811% of GDP. This book argues the stupidity and greed of Ireland's politicians and business leaders caused this.

3. The Storm: The World Economic Crisis and What It Means by Vince Cable

Vince Cable is currently the Miinster for Trade in the UK government. He was one of the few people to warn about the problems that eventually dragged this country into the Credit Crunch. This is a short and readable account of those events.

4. The Death of Economics by Paul Ormerod

This book was written some time ago, but is still excellent. It is good for those students who also know some maths. The central idea of the book is how the maths and stats used in making economic forecasts is wrong, and how this has led to completely wrong decisions and theories.

If you would like some more suggestions, here is a longer list from tutor2u:

http://www.tutor2u.net/blog/index.php/economics/comments/revised-reading-list-for-economists-post-as-papers/#extended

No 147: Don't live here!

2010-09-27T11:31:00.000+01:00

A NEW survey claims that the UK is the second-worst European country to live in .

http://www.uswitch.com/news/money/uk-worst-place-to-live-in-europe-uswitch-quality-of-life-index-890419/

According to the article:

"People in the UK pay the highest prices for food and diesel, yet the government spends below the European average (as a percentage of GDP) on health and education. We also work longer hours, retire later, receive less annual leave than most of our European counterparts and get less sunshine along the way – not to mention the fact that we can expect to die two years younger than our French counterparts."

Therefore the message to you would appear to be: get your excellent university degree from the UK, but don't stay here afterwards!

However, as usual, a closer look at the statistics is interesting, to me at least! Firstly, only 10 countries are included in the study. Secondly, take a look a list of indicators used in the research:

net household income after tax
VAT
average working hours per week
hours of sunshine per year
retirement age
number of days holiday per year
education spending as % of GDP
health spending as % of GDP
fuel unleaded gasoline per litre
fuel diesel per litre
gas per GJ
electricity per kWh
alcohol prices index
food prices index
cigarette prices per 20
life expectancy

I have no problem with the use of stats number 1-8 and 16. What worries me is that there are 7 out of 16 indicators about cost of goods and services, which appears unbalanced. Thus, a country like Poland, which has by far the lowest income, scores well in the survey because its prices are so low.

Can you please notice any other possible problems which can help save my wonderful country from being called the 2nd worst place to live in Europe?

No 145: World Economics News

2010-08-29T20:50:00.001+01:00

UK CPI INFLATION for July was 3.1% down from 3.2% in June. The Bank of England stated that they could not see it falling to the 2% target this year.

The ONS (Office of National Statistics) revised Q2 GDP Growth up to 1.2% from their earlier estimate of 1.1%. This was the fastest rate of quarterly growth in the UK since 2001, but economists are expecting a slower rate during the rest of the year.

(See here for more.)

Q2 GDP was revised in the USA, but downwards, from an estimate of 2.4% to 1.6%. This has led many to expect more quantitiative easing to be introduced soon by the US government and Federal Reserve.

Germany grew in Q2 by 2.2%, its highest ever rate since reunification in 1990.

However, Greece (1.5% fall in GDP), Spain (only 0.2% rise) and Japan (only 0.4%) all had disappointing growth figures. For Japan, this was also the month in which it fell behind China's total GDP and therefore dropped to being the world's third biggest economy. Income per person in Japan, however, is still ten times as much as in China.

No 144: BBC Dimensions

2010-08-26T21:34:00.001+01:00

SOMETIMES the true size of something is hard to understand without actually seeing it.

The BBC Dimesions site (http://howbigreally.com/) helps with this.

For example, this is the size of the moon, centred on London:

Which is smaller than the size of this:

Here is a visualisation of a terrible disaster that is happening now:

And finally something a bit lighter in mood:

It looks like the main stone for human sacrifices is just about where I teach economics...........

No 143: Reading for Advanced Students of Economics

2010-08-26T21:19:00.001+01:00

THE three words you are going to hear again and again in A2 Economics class will be:

do more reading

Another thing to say about the A2 year is

students who begin the year by working hard usually finish it working hard

students who begin the year by not working hard................

You can finish it!

So, any one want to do more reading now and start working hard even before the A2 year begins?

If you do, here is a link to a tutor2u reading list of 12 online economics articles, "designed to take Year 12 (i.e. A2) economists into interesting areas of recent research in economics, management and the application of economic ideas ... with one eye on strengthening their UCAS application":

tutor2uarticlelist

No 142: Statistical Analysis of Exam Performance

2010-08-23T21:57:00.004+01:00

I WANTED to wait for a few days until you have all had time to digest your exam results before I gave you my comments.

Of course every student is interested in his or her own performance, and I am very sorry if you were disappointed with your results.

However, as you can see in the graph below, as a group in both A2 and AS Economics you did significantly better than the national average.

(You've also done better than the Bellerbys' averages of 56% B or above for AS, and 63% for A2.)

Many congratulations on this group performance.

I think you should be especially proud since these were results in which you bettered students who have English as their native language.

P.S. If you are disappointed with your results, please e-mail me if I can help in any way.

No 141: Japan no longer world's second biggest economy

2010-08-16T15:43:00.004+01:00

A LONG predicted event has finally happened: China is now officially the world's second biggest economy.

For more details read:

http://uk.finance.yahoo.com/news/japanese-economy-slips-to-third-in-the-world-skynews-4d6c38cb3df5.html

This news might not seem so surprising given that Japan has had low or even negative growth over the past ten years, while China has averaged 10%.

Nevertheless, the gap between the two countries' GDP 30 or 40 years ago was huge. Click on the next link, and you can see an interactive graph I made on gapminder that shows this:

www.bit.ly/cDtgEa

Here is a screenshot of what it looks like:

Try dragging back the arrow at the bottom to 1960 then press play to see how GDP changed. You can also click on other countries in the panel on the right to see how they did in comparison.

It's worth having a good play around with this - we will be using the gapminder software a lot in my classes during the next school year.

No 140: World Economic News

2010-08-07T22:57:00.000+01:00

UK GDP expanded by 1.1% in the 3 months up to the end of June, a better performance than many expected.
This is compared to the 0.3% growth in quarter 1 of this year.

Meanwhile South Korean growth slowed to 7.2% in 2010 Q2, from 8.1% in Q1.

USA growth dropped to 2.4% Q2 from 3.7% Q1.

Export figures boomed for India (up by 30.4% so far this year) and Malaysia (17.2% more compared to this time last year).

Unemployment fell in June in Brazil (to 7%) and Mexico (from 5.4% to 5.1%) but in the Eurozone stayed at 10%. Spain's jobless figure is still 20%.

Inflation decreased in Russia (down to 5.5% from 5.8%) and Switzerland (now 0.4%).

The generally positive news is reflected in the statistics for World GDP:

No 139: Lending

2010-08-07T22:44:00.000+01:00

UK BANKS have been announcing their yearly profits over the last few weeks, and they are all making profit again, including those who are partly owned by the British taxpayers.

For example

(See http://www.bbc.co.uk/news/business-10889684 and http://www.bbc.co.uk/news/business-10878694 for more.)

However, as the diagram below shows, this doesn't seem to have been accompanied by more lending to businesses:

Economists argue that lending to businesses is essential for the recovery stage of the economic cycle. For a while when climbing out of recession, a lot of businesses do not need new capital goods since those they already have are likely to have extra capacity that can be used.

But once consumer demand picks up beyond a certain stage, businesses must first purchase extra capital goods in order to produce more goods for consumers.

The diagram above shows this is not happening.

Many people think this is because the banks are refusing to make loans available to businesses. However, the banks are arguing that they are offering funds, and that the lack of business borrowing isn't their fault.

Can anyone guess who the banks are blaming for the lack of business borrowing in the UK economy? (I'll try and give one of my amazing prizes to whoever has the best answer......)

(Here is the Economist article I took the diagram from http://www.economist.com/node/16693862)

No 138: How the internet works

2010-08-07T21:50:00.002+01:00

MAKEUSEOF.COM is an excellent site for finding all kinds of internet tools and apps.

I recommend subscribing to their daily e-mail newsletter.

Although it's not about economics, I think this infographic of theirs is quite interesting:

[Via: Online Schools]

No 137: Friend of this blog 2

2010-08-04T12:27:00.001+01:00

SOME of you studied with Tang, first and so far only winner of the Bellerbys Nobel Prize for Economics (see post 32).

He is currently studying for a BA back in Singapore, and he recently wrote to me about an excellent website: http://www.ted.com/.

This organisation invites all kinds of famous and/or clever people to talk, the only rule being that they can have to limit their speech to less than 20 minutes.

To get you started, I really like this guy
http://www.ted.com/talks/hans_rosling_reveals_new_insights_on_poverty.html

(By the way, he is using the amazing Gapminder software (go to http://www.gapminder.org/) which I will be using a lot in class next year. I'll blog about it soon.)

You can see that subtitles are available for the talks and you can also read the transcript while the speaker is talking.

I also like this guy http://www.ted.com/search?q=ariely&x=0&y=0.

As always, please share with us any other interesting things you find.

This isn't from TED but it's nice:

No 136: Friend of this blog 1

2010-08-04T11:57:00.001+01:00

NICK from Geognos website (see Post 65) has just contacted us about some very useful new information he has put on his site.

If you go to http://www.geognos.com/geo/en/countries-list-menu/Economy.html

you will see this page:

There is a good relevant selection of information here, especially with relation to the Credit Crunch.

For instance, here is the first data visualisation, about government revenue and spending:

(I've only made a screen shot of the top ten.)

This is the 4th data set, about different countries' GDP and how much comes from agriculture, industry and services. As you can see, it is currently organised alphabetically.

Clicking on the relevant column arrow reorders this to show, for instance, those countries who have the largest part of GDP from industry:

Don't be fooled by this - it ISN'T saying that, for example, Iraq has a lot of manufacturing industry, just that in comparison to agriculture and services, by far the largest area of the country's output in from industry. It's probably 62.8% of not very much!

If I could be allowed one slight criticism, it would be good to know the sources of the data Nick has used.

Nevertheless, this is a very good resource. Play around with it yourselves and let me know if you find something interesting or surprising.

No 135: To have a summer break or not .....

2010-08-03T09:42:00.001+01:00

How are your holidays going? Are you bored yet and wishing you were back to studying? No, didn't think so.........!

While in the long term this blog will of course keep going, I want to decide whether it should have a rest during the month of August.

I really don't mind doing it if anyone is reading at the moment, so if you are either vote in the new poll or leave a comment, and even if I get some replies, I will continue.

UPDATE Already a few votes in the poll, thank you!

Please add yours if you are reading - it's gives the writer of this blog encouragement.

I guess we won't be taking a break during August then. Which is fine, since I've got quite a lot of interesting stuff to share with you.........

No 134: University Economics Lecture Notes and Assignments

2010-07-21T00:28:00.000+01:00

HERE'S a website by the above famous American university that has links to all of their economics courses, with lots of useful lecture notes and assignments.

http://ocw.mit.edu/courses/economics/

Could be useful to those of you going to study economics at university...

No 133: Which percentile are you in?

2010-07-21T00:22:00.000+01:00

A FUN tool from the New York Times, where you can calculate the status of yourself or your family based on occupation, education, income and wealth.

Here's a screenshot (click here to try the real thing):

I'm not going to show you my information (I know you students always want to know how much us Bellerbys teachers earn), but I will say that overall I was placed in the 71st percentile. What about you?

No 132: History of the National Debt

2010-07-20T23:02:00.000+01:00

Hi guys, by now you must be bored of being on holiday, so here's something for you to look at!

(Source: Stock Tickle blog from Business Insider)

A few observations.

The current increase in debt due to the Credit Crunch has been about 110% of GDP. The jump after 1918 was about the same. Financially, the cost of the Credit Crunch has therefore been about the same as the that of the First World War.

Notice that debt went down during the 1980s recession - Thatcher's government being anti-Keynesian im their belief that cutting spending would be more effective than spending more.

The 1929 onwards recession is interesting. At first, debt went down following the Wall Street Crash, as pre-Keynesian governments cut their spending. By the late 1930s, this trend was reversed as new policies were introduced, as well as increased spending on rearmanent before WW2.

The "Golden Age" of the UK economy from the 1950s to mid 1970s saw a consistent fall in national debt as governments used favourable economic situations in order to pay back debt. The "Nice Decade" of Blair and Brown did not see any similar reduction in borrowing.

As I was reading earlier today, we should all remember that recession spending by governments is only one half of Keynesian fiscal policy; building up savings in good times is the other.

Oh dear, not much summer fun in this post. Here's a video of a fight in the Taiwan parliament. When I lived there, there seemed to one every week...... good to see democracy being taken so seriously.

No 131: The end of cheap Chinese labour?

2010-06-28T23:28:00.000+01:00

I HAVE just found this really interesting slide slow about this topic:

Click here to view it.

Each of the photos illustrates a powerful argument about why this might be happening. The arguments are:

1. The doubling of Foxconn workers' salaries after the suicides in factories making Apple products.
2. A recent article in the "People's Daily" (a Communist Party newspaper) calling for a revolt against the rich by poor workers.
3. Strike at a Hylandai factory in Beijing and subsequent 25% pay rises.
4. Honda workers going on strike even though they were offered 24-32% more pay.
5. The Beijing munipcal government raising its minimum wage by 20%.
6. The "one-child policy" leading to a shortage of labour supply.
7. A government half trillion dollar rural development programme leading to labour shortages in citiies.
8. New laws in 2008 for workers' rights.
9. Low wages being less benificial to China's economy than in the past.

On the last point, it has often been commented that wages inside China have been controlled in order to keep inflation down, while growth came from exports rather than domestic consumption. Perhaps the fall in world demand for Chinese products since the Credit Crunch may be changing this......

What do you think about it?

No 130: What a relief!

2010-06-28T23:13:00.000+01:00

SEARCHING for an image to show "relief" I found this quite remarkable product:

Well done to all of you for reaching the end of your A level Economics course, whether A2 or AS.

The huge amount of intelligent work I have seen this year from my students has been greatly impressive, and I hope you feel you have gained by being members of my classes.

I will be continuing this blog over the holidays and I hope you will continue to read it. I will try and make the tone a bit more fun though - no exams to worry about for a while!

If you want to read more about the amazing effects of the product above, go here...

No 129: tutor2u Notes and Presentation for AS Module 2

2010-06-04T11:03:00.000+01:00

THESE are some notes about cyclical unemployment:

tutor2u cyclical unemployment

Some about SSPS:

tutor2u supply side policies notes

Unemployment:

tutor2u unemployment notes

12 Useful AS Macro presentations:

tutor2u 12 useful

Policies to control inflation:

tutor2u inflation policies notes

Cost push inflation:

tutor2u cost push notes

Demand pull:

tutor2u demand pull notes

Investment:

tutor2u investment notes

Saving:

tutor2u saving notes

Borrowing:

tutor2u consumer borrowing notes

Consumption:

tutor2u consumption notes

No 128: Links to tutor2u revision notes for A2

2010-06-04T10:54:00.000+01:00

THIS post in tutor2u links to many sets of notes about trade:

tutor2u trade notes

These are about exchange rates:

tutor2u exchange rate notes

And balance of payments:

tutor2u balance of payments notes

SSPS:

tutor2u supply side policies notes

Unemployment:

tutor2u unemployment notes

Fiscal:

tutor2u fiscal policy notes

No 127: Final Figures for Exam on Monday

2010-06-03T14:49:00.000+01:00

YOU need to learn these key stats for the Module 2 exam on Monday:

CPI INFLATION: 3.7% (APRIL) Up by 0.3%

UNEMPLOYMENT 8% (MARCH) Up by 0.2%

GDP GROWTH 0.3% (Q1 2010) Down by 0.1%

TRADE BALANCE -£3.7 BILLION (MARCH) Up by £1.6billion

No 126: This morning's European Union video and data

2010-06-03T12:56:00.000+01:00

HERE is the amusing video about an unamusing topic we watched in A2 this morning:

And here is the link to the BBC data graphics about the EU economies:

http://news.bbc.co.uk/1/hi/business/10150007.stm

No 125: Two very useful articles for Module 3

2010-05-23T22:23:00.000+01:00

THESE two are really worth reading for those of you who are going to do the Module 3 exam.

Firstly, surprising news about poverty and the distribution of income:

Full article here.

Secondly, news that the EU carbon trading scheme is being threatened by the recession:

See here for the rest.

No 124: Some articles of interest

2010-05-23T22:16:00.002+01:00

NOURIEL Roubini, Professor at New York University, is famous as one of the only economists to accurately predict the Credit Crunch.

Read this to see what he thinks will happen next:
http://www.telegraph.co.uk/finance/economics/7756684/Nouriel-Roubini-said-said-the-bubble-would-burst-and-it-did.-So-what-next.html

The UK is the 22nd most competitive country in the world. China has entered the top 20 for the first time. USA has dropped to 3rd, behind Singapore and Hong Kong.
http://business.timesonline.co.uk/tol/business/economics/article7132864.ece

Do the recently high rates of inflation mean that the monetary policy of the Bank of England is failing?
http://www.guardian.co.uk/business/2010/may/18/inflation-analysis-larry-elliott

Cutting budgets now, according to this article, risks plunging the world back into recession, just as Keynes warned 80 years ago.
http://www.guardian.co.uk/commentisfree/2010/may/17/keynes-danger-deficit-reduction

No 123: UK inflation hits 17-month high

2010-05-19T08:23:00.000+01:00

ON THE CPI measure, inflation hit 3.7% - well above the target of 2% and the highest rate since November 2008.

On the RPI measure, which includes housing costs, inflation was up to 5.3% - its highest rate in 19 years.

This is a link to a tutor2u article about it, with some good graphs.

No 122: More tutor2u presentations

2010-05-14T10:46:00.000+01:00

HERE they are as requested:

For both AS and A2 Macro
The Credit Crunch and possibilties of recovery
http://www.tutor2u.net/economics/presentations/workshops2010/AS3/player.html

AS Module 2
The balance of payments (note: needs to be downloaded into Powerpoint)
http://www.tutor2u.net/blog/index.php/economics/comments/as-economics-revision-the-balance-of-payments/?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+economics_news+%28tutor2u+Economics+Blog%29#When:17:12:00Z

A2 Module 3
Evaluation of the NMW
http://www.tutor2u.net/economics/presentations/a2economics/evaluation/nmw/player.html

Interdependent Behaviour in Oligopoly (a post not a presentation)
http://www.tutor2u.net/blog/index.php/economics/comments/a2-economics-revision-interdependent-behaviour-in-oligopoly/?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+economics_news+%28tutor2u+Economics+Blog%29#When:06:59:00Z

No 121: New economic indicators

2010-05-13T12:00:00.001+01:00

RECENT changes to key economic figures:

Unemployment
Up to 2.51 million but rate remains 8%. The highest number of unemployed workers since Decemeber 1994.
http://news.bbc.co.uk/1/hi/business/10109965.stm

Balance of Trade
A deficit of £3.7 billion in March compared to £2.2 billion in February.
http://news.bbc.co.uk/1/hi/business/10113630.stm

Base Rate of Interest
Bank of England keeps it at 0.5% despite inflationary pressures. It has been at this level since March 2009.
http://news.bbc.co.uk/1/hi/business/10104900.stm

No 120: Tutor 2 U presentations

2010-05-11T09:39:00.000+01:00

TUTOR2U has produced some very useful revision presentations. Here are links to some of them:

For AS Module 2

Supply side policies: http://www.tutor2u.net/economics/presentations/workshops2010/AS2/player.html

Manging the economy: http://www.tutor2u.net/economics/presentations/workshops2010/AS4/player.html
(watch out for strange AD/AS diagrams!)

For A2 Module 4:

Protectionism: http://www.tutor2u.net/economics/presentations/workshops2010/A22/player.html
(watch out for some anti-Chinese exchnage rate stuff!)

Global trade and investment: http://www.tutor2u.net/economics/presentations/workshops2010/A21/player.html

LET ME KNOW IF THESE ARE USEFUL AND WANT SOME MORE!

No 119: Exam Focus 1 - Externalities

2010-05-05T21:40:00.000+01:00

IF YOU have looked through Module 1 past papers, you will notice this is the most common topic for essays, especially negative externalities.

Here are some important points to remember about externalities:

1) Essential to any definition is the idea that externalities describe effects on other people rather than either the producer or consumer of that particular good.

Some examples:

consumers of cigarettes affecting people who are not smoking
drinkers taking up hospital beds which could be used by cancer patients
drivers of electic cars contributing to lower CO2 emisions for everyone else
a chemical factory using techology to clean up its pollution into a river used by fishermen

2) Social costs are NOT the same as negative externalities (same with social benefits / positive externalities).

Consider......

Total chocolate bars you have = Galaxy bars you have + Snickers you have
Total chocolate bars is NOT only just how many Galaxy bars you have.

Total exams you take this year = Number of A level exams + Number of IELTS exams
Total number of exams is NOT only the number of A level exams

Total costs of something to society = All the costs affecting the producer and the consumer + All the costs affecting other people
Therefore, total costs to society are NOT only all the costs affecting other people

Since total costs of something to society are social costs
And all the costs affecting the producer and consumer are private costs
And all the costs affecting other people are negative externalities (also called external costs)

Social costs = Private costs + Negative externalities

3) Problems with free market quantity of a good happen if it either has a very high amount of negative externalities or a very high amount of positive externalities.

All goods have some positive externalities and some negative externalities. However, if these are relatively small, the free market should be doing an acceptable job in providing the good.

4) Be careful what you call a "merit good" or "demerit good".

Trains are not a merit good. Why not? Well, while they do have a high amount of positive externalities (reduced road congestion for example), it seems like the free market is often able to provide enough trains.

Petrol is not a demerit good. Why not? Well, while it does cause a lot of negative externalities, it also has quite a lot of positive externalities - for example, allowing transportation of goods to shops or allowing the production of plastic.

Please let me know if this has been useful, and if there is another topic (micro or macro, AS or A2) that you would like me to write about.

No 117: In case you wanted to know what's happening in the election......,

2010-04-28T10:56:00.002+01:00

No 116: New growth figures

2010-04-25T16:13:00.001+01:00

FRIDAY saw the publication of Q1 2010 GDP figures, which completes a new set of not very positive economic indicators.

(Read full article here.)

Yes, the figure may be revised, but I very much doubt if it will go up to anything above 0.5%.

So, if we review the indicators again with how they have changed, what comments would you make about the current state of the UK economy?

CPI INFLATION: 3.4% (MARCH) Up by 0.4%

UNEMPLOYMENT 8% (MARCH) Up by 0.2%

GDP GROWTH 0.2% (Q1 2010) Down by 0.2%

TRADE BALANCE -£2.1 BILLION (FEB) Down by £1.7billion

No 115: And finally some more good

2010-04-21T22:42:00.002+01:00

REGARDING the UK balance of trade:

Read article here.

No 114: More bad

2010-04-21T22:35:00.000+01:00

EARLIER this week new inflation numbers were announced.

CPI increased from 3% to 3.4%, and RPI from 3.7% to 4.4%.

Probable causes of this are higher oil prices, a stronger dollar, and the rise in VAT this January from 15% to 17.5%.

Does this mean that the Bank of England should raise the base rate?

No 113: Now some bad!

2010-04-21T22:29:00.002+01:00

IMPORTANT new economic figures announced in the past few days.

Today, new unemployment statistics showed a rise in the LFS to 2.5 million out of work, or 8% of the workforce. This is the highest since 1996.

This may not be as bad as it looks. Often, unemployment is "lagged", that is, it increases or decreases more slowly than other indicators such as GDP, due to the time taken for changes in the economy to be reacted to by firms. Therefore, the rest of the economy may be in recovery while the unemployment figures reflect earlier recessionary conditions.

On the other hand, the Claimant Count decreased by 33,000. This, however, is probably not a sign of lower joblessness but of people stopping looking for work -that is, becoming economically inactive. It seems though that a lot of these are becoming students, which, as you know, may mean future private and external benefits.

We must acknowledge that the new unemployment figures are serious, and damaging to a Labour government looking to get re-elected. Their response would proabably be that we have suffered the worst global economic crisis since 1929, and unemployment is still not as bad as it was during the recessions of both the early 1980s and 1990s. Whether recent policies have helped with this, is another question to be debated.

NOTICE MY FRIENDS THAT THIS POST CONTAINS MORE EVALUATION THAN I SEE IN A YEAR OF SOME STUDENTS' ESSAYS.

HOPE YOU CAN LEARN FROM IT!

No 112: First the good news......

2010-04-21T22:16:00.000+01:00

A COUPLE of good signs in the UK economy.

First, regarding business confidence:

Full article here.

And this report by a powerful international organisation argues there will be relatively strong UK economic performance in the second half of 2010:

Read more here.

A couple of possible problems. Confidence in the economy, unfortunately, can rapidly disappear if something goes wrong later. Also, while Britain's growth may exceed that of other similar countries this year, its GDP fell by more than most of them during the recession, and many of these other nations are more advanced in their recovery.