Business spending fell at sharpest pace for two years in final quarter, compounding anxiety about unstable recovery
Source: UK economic growth reaches 0.5% but slowdown fears persist | Business | The Guardian
L6th IB article of week – Harry M.
Tag: ib2.3
Phillips Curve
The Phillips Curve can be used to illustrate a macroeconomic policy trade off, namely attempts to reduce unemployment will lead to an increase in inflation and a failure to achieve price stability.
Phillip’s work has been heavily criticized because the stable relationship between unemployment and inflation has broken down. The 1970’s was a period noted for stagflation – high unemployment and inflation. In 2016, the UK’s unemployment rate currently sits at about 5%, while the inflation rate hovers close to 0%. Both periods contradict Phillips’ original findings.
The following materials are intended to support your understanding of this topic. Review and add to your notes.
Dollar Street
Source: Dollar Street
An innovative visualisation of how sustained economic growth, rising per capita incomes, and increased consumption can help to improve standards of living.
BBC News – Is Christmas getting cheaper?
Is Christmas getting more expensive or are we in for a bargain year? We look at the changing costs of food, drink and toys
Source: BBC News – Is Christmas getting cheaper?
I was a big fan of He Man in the mid 80’s, but it appears the action figures I pestered my parents to buy me for Christmas were not cheap. This great piece by the BBC illustrates perfectly the impact of inflation and the importance to convert prices into ‘real’ terms in order to make comparisons over time.
Economic Growth
Watch, read, add to your notes.
Eurozone inflation drops below zero as prices fall by 0.1% | Business | The Guardian
Negative inflation brought on by cheaper energy prices puts pressure on European Central Bank to boost stimulus programme
Source: Eurozone inflation drops below zero as prices fall by 0.1% | Business | The Guardian
Article of the week courtesy of Dhwani Patel.
Rising minimum wages make automation more cost-effective
The movement pushing for a $15 per hour minimum wage has coincided with falling prices for computers that can replace human labor in some low-skill jobs.
Source: Rising minimum wages make automation more cost-effective
Article of the week from Elle Li.
Macroeconomic musings 8th October
The UK economy continues to progress well. This year, for the 3rd year in succession, it is likely to achieve the fastest growth in GDP of the G7 countries and, also this year, real disposable income grew at its fastest rate for five years. In terms of happiness, as measured by the ONS, people are more content than ever with a happiness rating of 7.5/10, the highest since the survey was first carried out in 2012.
However not all is going according to plan. The current account deficit continues at a record level and is being financed by overseas borrowing, inward FDI (not a bad thing) and sales of assets such as London property. As a result, although GDP is doing well, GNP (or GNI) which measure the amount of income going to UK firms and households, as opposed to GDP, which looks at activity in the UK, is doing less well and has grown by approximately 1% per year less than GDP. The difference between them is the net amount of money flowing out of the UK, for example the foreign industries in the UK sending their profits home. Furthermore we are receiving less in the form of interest, profit and dividends from our overseas assets because of lower interest rates and reduced profits as other countries struggle to escape the recession.
Economics Department Blog 