U.K. Economy Essay - 1546 Words

U.K. Economy The UK government currently has four main macroeconomic aims that it is pursuing. These aims are those of low unemployment, low inflation, and high and stable economic growth as well as a favourable balance of payments current account position. This essay will concentrate on the government’s success in the first three of its aims listed above and how these macroeconomic aims can or have been achieved using fiscal and monetary policy. Fiscal policy is used to affect aggregate demand by altering taxation and government spending; monetary policy also affects aggregate demand by the manipulation of interest rates and the supply of money. Economic growth is the prime measurement of a country’s economy as it†¦show more content†¦Indeed, inflation since 1990 has remained remarkably stable by UK standards, however in February 2003 the RPI rose to 3.2%, mainly due to clothing and petrol prices going up. Monetary policy has allowed the UK to enjoy low levels of inflation for a number of years now, in particular since the 1990’s. This can be seen in the diagram below, where the Bank of England have been able to meet the 2.5% target (+ or – 0.5%) through the skilful use of interest rates. Generally, if inflationary pressures on the economy are high, the MPC reacts by increasing interest rates. This increase in interest rates causes a fall in aggregate demand from AD1 to AD2 and thus a fall in inflation from P1 to P2 via the following transmission mechanisms. Consumption, a component of aggregate demand (consumption + investment + government spending + (exports-imports)) falls as the cost of credit increases due to more interest having to be repaid and thus big ticket credit purchases become relatively more expensive, as the opportunity cost of spending increases (as more interest is forgone) and as the effective disposable income of consumers on variable rate mortgages falls. Furthermore, investment falls as firms are less willing to obtain more expensive credit through borrowing and more likely toShow MoreRelatedImpact Of Globalisation On Higher Education940 Words   |  4 Pagesadaptation to the demands of globalisation on higher education. It will provide examples from each country which demonstrate how that country has adapted its HE practices to accommodate globalisation and participate in an increasingly competitive global economy and knowledge-based societies. Importance of the proposed research A key outcome of this research will be to examine the work of leading scholars in order to ascertain a historically meaningful definition of Globalisation. It is my hope that theRead MoreAspects of Globalisation Essay1778 Words   |  8 Pagestechnology and high value added parts will require a skilled or well educated workforce, and are therefore likely to be concentrated in more capital-intensive locations. Globalisation could be seen to significantly affect developing economies, such as Ghana and Egypt. For example, according to statistics, there has been a rise in these countries in manufacturing employment and a fall in primary sector employment. Nevertheless, on the other hand, globalisation has resultedRead MoreThe Impact of Globalization on the UK Essay479 Words   |  2 Pagesmarket for Chinese manufactures ) went into recession, then it could impact on the Chinese economy, and could also impact on other economies (or the whole world) that may be supplying China with raw materials and components. In short, the fortunes of countries are becoming more closely linked to each other, making it more difficult for domestic governments to control their own economies. The internet has played a role in the spread of this globalisation. 2. ApartRead MorePEST analysis of Siemens703 Words   |  3 PagesSiemens AG PESTLE Analysis Political Factors Siemens AG will be subject to legislation in any country within which they are operating. With the head office in Germany they are subject to German and European corporate law. In the U.K Siemens must obey English legislation specific to that market. For example The Trades Descriptions Act, which states that a company may not falsely advertise any of its products or services. Also effecting the company s operations in Britain are the Sale of GoodsRead MoreService Industry : An Industry Essay926 Words   |  4 Pagesis an industry that creates services. In economy, economic activity are divided into two categories which are goods and services. Goods-producing industries provide tangible object namely mining, manufacturing, agriculture, and construction. Service industries include other activities apart from goods-producing industries such as wholesale, retail trade, banking and communications. In developed countries service industry plays an important role in the economy while primary activities, for example,Read MoreThe Economizing Problem - and Its Direct Effect on the Economy at Large. a Short Essay from Islamic Perspective by Mustafa Aydemir V0.41664 Words   |  7 PagesINCEIF Student Name: Mustafa Aydemir Student ID: 1200279 IE1001 Assignment in Islamic Economics - Short Essay No 1 by Mustafa Aydemir - Version 0.4.doc -1-     Bismillahirrahmanirrahim The economizing problem - And its direct effect on the economy at large. A short essay from Islamic perspective by Mustafa Aydemir Human beings are greedy by nature and their needs are universally recognized as infinite. A simple prove for this statement is the wish of every person to live forever. The unlimitedRead MoreThe Ecological Kuznets Bend ( Ekc )6381 Words   |  26 Pagesexpenses are high, and the capacity of our economies to develop and thrive will depend like never before on the nature of government activities and on solid and successful worldwide co-operation. Restoring dependability, confidence and development remains the need. The OECD has been working with the world s administrations and different associations to beat the emergency and get our economies moving once more. It is serving to shape the post-emergency world economy – to make it more grounded, cleaner andRead MoreEconomic Growth Is The Prime Target Of A Nation1819 Words   |   8 Pageswell being. It s a worthy target as historical data confirms that a very low level of growth over a long span of time can bring out a great difference. For example, according to information from Lawrence H.(2011), if we adjust average growth of U.K. over a long span of time (between 1830 and 2008, just 178 years ), we will see the growth rate was pretty minimal, only 1.97%. But if we measure the increase in GDP as a whole - the result is staggering- A 32 times increase (From 41,373 million poundsRead MoreFederal, State, And Foreign Laws With Safety And Environmental Regulation2116 Words   |  9 Pagesthat are associated with waste and hazardous materials affecting the environment. The company understands that there is a high possibility of risks which will likely to happen when the company operates in several international locations such as the U.K., the Netherlands, Germany, and the Philippines (â€Å"2015 Annual Report,† 2015). Since most of its revenues come from outside of the U.S., volatile political forces might have a negative impact on its business operations and economic condition. One ofRead MoreEconomic Growth Is The Prime Target Of A Nation1819 Words   |  8 Pageswell being. It s a worthy target as historical data confirms that a very low level of growth over a long span of time can bring out a great difference. For example, according to information from Lawrence H.(2011), if we adjust average growth of U.K. over a long span of time (between 1830 and 2008, just 178 years ), we will see the growth rate was pretty minimal, only 1.97%. But if we measure the increase in GDP as a whole - the result is staggering- A 32 times increase (From 41,373 million pounds