Questions from General Economics

Q: Adam Smith, the founder of modern economics, remarked in The

Adam Smith, the founder of modern economics, remarked in The Wealth of Nations (1776) concerning the balancing of budgets, ‘What is prudence in the conduct of every private family can scarce be folly...

Q: Imagine you were called in by the government to advise on whether

Imagine you were called in by the government to advise on whether it should attempt to prevent cyclical fluctuations by the use of fiscal policy. What advice would you give and how would you justify t...

Q: Why are both the price elasticity of demand and the price elasticity

Why are both the price elasticity of demand and the price elasticity of supply likely to be greater in the long run?

Q: Why is it difficult to use fiscal policy to ‘fine tune’

Why is it difficult to use fiscal policy to ‘fine tune’ the economy?

Q: When the Bank of England announces that it is putting down interest

When the Bank of England announces that it is putting down interest rates, how will it achieve this, given that interest rates are determined by demand and supply?

Q: How does the Bank of England attempt to achieve the target rate

How does the Bank of England attempt to achieve the target rate of inflation of 2 per cent? What determines its likelihood of success in meeting the target?

Q: To what extent did the Bank of England’s Monetary Policy Committee and

To what extent did the Bank of England’s Monetary Policy Committee and other central banks face a dilemma in 2008, when faced with rising inflation and the onset of recession?

Q: What is meant by a Taylor rule? In what way is

What is meant by a Taylor rule? In what way is it a better rule for central banks to follow than one of adhering to a simple inflation target?

Q: Under what circumstances would adherence to an inflation target lead to

Under what circumstances would adherence to an inflation target lead to (a) more stable interest rates, (b) less stable interest rates than pursuing discretionary demand management policy?

Q: Imagine that two countries, Richland and Poorland, can produce just

Imagine that two countries, Richland and Poorland, can produce just two goods, computers and coal. Assume that for a given amount of land and capital, the output of these two products requires the fol...