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Thursday, 29 January 2015

Unit 4: Balance of trade around the world

FT Video has a short animation by Martin Wolf explaining why global trade imbalances matter. This is a great introduction to balance of payments. 

Remember, you MUST be quite clear on the difference between a trade surplus or deficit and a government surplus or deficit - which is a classic confusion for a great many. 

You need to understand not only that some countries have vast current account trade surpluses, as shown in this graph from The Economist in 2012, but also that some of those cash mountains are then used to fund buying government debt from countries. 

Challenge: To investigate that issue, I suggest two articles; for the UK, try this in the FT about foreign investors selling UK gilts and the other from CNS News about foreign holdings of US Treasury Bills.

Unirt 2 & 4: Economic Policy from UK, Russia & EU.

Thanks to Eyad for finding these two articles on two economies around the world.

This one looks at how the Russian government is trying to get out of the current crisis they are in.

This one looks at the UK economy. Recent gdp growth data suggests the UK economy is strong, with growth figures of 2.6% this year. (Click here for excellent piece looking at key economic data over a period of time)

There are several economies that are looking at different ways to get out of recession. The UK kept with austerity, the Russians are looking at increased government spending,whilst Europe are looking to quantitative easing. Click here for article explaining rationale behind a bond buying programme.

Really useful to compare different ways of dealing with economic issues.

Sunday, 25 January 2015

Unit 3: UK mobile industry - highly concentrated!

Thank you to Graham for this excellent clip discussing the impact on 3's takeover of O2.

Looks at concentration ratio's, pricing issues and oligopoly markets. Also raises the issue of regulation and why has this takeover been allowed?

Thursday, 22 January 2015

Unit 4: A richer, but more unequal world!

This issue is emerging as one of the big, if not the biggest, economics story of our times. The world is vastly richer than in even the recent past, with many poor countries making good progress in catching up with the richer ones.

Yet within almost all economies, income and wealth gaps are widening. Last year Oxfam were talking about a double decker bus, representing the world’s richest people, who own half the wealth. This year wealth is concentrated in even fewerhands.

The BBC and Guardian carry the Oxfam story about steeply rising wealth inequalities.

This is a huge topic. You can start by thinking what may be behind this problem. More time could go into analysing its effects. (see slideshow below)

The good news is that the BBC are launching a new series – A Richer World. The trailer says ‘the world is getting wealthier - we live longer, eat better, are better educated and fewer people live in extreme poverty. But with the gap between rich and poor feeling bigger than ever, the BBC is investigating the winners and losers of this richer world in 2015.

There’s a good video clip to introduce the series here, and a short trailer using the example of New York City to illustrate rising inequality within American society.

Many of the points raised above provide useful evaluative information for any question on policies to reduce income inequality.

Here is an interesting question.....what did you see in the picture?

Wednesday, 21 January 2015

Unit 3: UK Gas Prices...we said it would happen!

Scottish Power has become the third major gas supplier to announce a price cut, with the news it is to reduce prices by 4.8% from 20 February.  Click here for full article.

Lots of excellent economics for Unit 3, including kinked demand curve theory, regulatory power (have the gas companies gone far enough), oligopoly behaviour etc

Monday, 19 January 2015

Unit 4: World inequality

Oxfam have released data claiming that 1% of the worlds population own more than 50% of the world wealth. Click here for the article.

Activity: Find out what Oxfam's 7 point plan to reduce world inequality involves, and how effective it would be.

The above would be excellent for any essay on how to reduce poverty/inequality.

Thursday, 15 January 2015

Unit 2 & 4: Why is low inflation a bad thing?

CPI inflation has slipped well below the lower limit of the Monetary Policy Committee's target, to 0.5% - that is far lower than it fell during the recession, and the lowest level since May 2000. So, as Mark Carney prepares his letter to the Chancellor to explain how this has happened, and what the Bank of England intend to do about it, the BBC have published an article which examines why we need some inflation. It is one of those articles which is truly useful - probably more so than a text book as it is based on real, current context. 

Highly recommended to AS students learning about inflation for the first time, and A2 students who need to revise the basics. 

Robert Peston takes this a bit further, in a blog which A2 students should certainly read, as it examines the risk of deflation, and whether 'benign' price falls in food and fuel might become 'growth-killing' deflation. Again, it is textbook stuff which is happening in real-time, and really useful background for students. 

We have to wait to see Mark Carney's letter to the Chancellor, which will be published by the Bank of England alongside the February Inflation Report on 11 February. 

However, in the meantime,  ITV's Economics Editor Richard Edgar has his own ideas of what it may look like -drafting Mark Carney's letter could be a tempting exercise for prep, this week!