The credit crunch created massive deflationary pressures in the economy. The government have attempted to rectify this in a numberof ways.
• monetary policy: the Bank of England has reduced its repo rate to 0.5 per cent and introduced a massive programme of quantitative easing. This allows the bank to print money in order to buy assets. So far it has been used to purchase gilt edged securities but its scope could be extended to encompass other assets
• fiscal policy: the government has borrowed heavily in order to support the banks and has effectively taken control of Northern Rock, Lloyds and Royal Bank of Scotland. It has also reduced the rate of VAT to 15 per cent. A “cash for clunkers scheme” has been introduced to increase demand for new cars
• exchange rate policy: talking down the value of the pound, and the use of quantitative easing.
queen babito answered the question on July 9, 2018 at 07:10
- Analyse the impact of the credit crunch upon aggregate demand in the UK(Solved)
Analyse the impact of the credit crunch upon aggregate demand in the UK
Date posted: July 9, 2018. Answers (1)
- Economic theory assumes that consumers will buy more of a product when price falls and less when price rises. Evaluate the view that this assumption...(Solved)
Economic theory assumes that consumers will buy more of a product when price falls and less when price rises. Evaluate the view that this assumption is unrealistic
Date posted: July 9, 2018. Answers (1)
- Analyse how a change in demand or supply in one market may have effects on other markets(Solved)
Analyse how a change in demand or supply in one market may have effects on other markets
Date posted: July 9, 2018. Answers (1)
- Explain what is meant by the market clearing (equilibrium) price.(Solved)
Explain what is meant by the market clearing (equilibrium) price.
Date posted: July 9, 2018. Answers (1)
- Critically examine some of the policies which a government could implement to
reduce the negative externalities associated with such production. (Solved)
Critically examine some of the policies which a government could implement to
reduce the negative externalities associated with such production.
Date posted: July 8, 2018. Answers (1)
- Explain how negative externalities may cause firms in free markets to produce
at levels which are not economically efficient.(Solved)
Explain how negative externalities may cause firms in free markets to produce
at levels which are not economically efficient.
Date posted: July 8, 2018. Answers (1)
- Explain what is meant by productive and allocative efficiency(Solved)
Explain what is meant by productive and allocative efficiency
Date posted: July 8, 2018. Answers (1)
- Critically examine the impact of globalisation on Less Developed Countries (LDCs)(Solved)
Critically examine the impact of globalisation on Less Developed Countries (LDCs)
Date posted: July 8, 2018. Answers (1)
- Critically examine the view that a deficit on the current account of the balance of payments is of no economic significance.(Solved)
Critically examine the view that a deficit on the current account of the balance of payments is of no economic significance.
Date posted: July 8, 2018. Answers (1)
- Explain the difference between the current account and the financial account in the
UK balance of payments.(Solved)
Explain the difference between the current account and the financial account in the
UK balance of payments.
Date posted: July 8, 2018. Answers (1)
- Explain the difference between fixed and floating exchange rates. (Solved)
Explain the difference between fixed and floating exchange rates.
Date posted: July 8, 2018. Answers (1)
- Explain how the short run price and output decisions of a profit maximising firm would differ from those of a revenue maximising firm(Solved)
Explain how the short run price and output decisions of a profit maximising firm would differ from those of a revenue maximising firm
Date posted: July 8, 2018. Answers (1)
- Critically examine the view that mergers are against the public interest and should be outlawed(Solved)
Critically examine the view that mergers are against the public interest and should be outlawed
Date posted: July 8, 2018. Answers (1)
- Explain the difference between organic growth and growth by acquisition or merger(Solved)
Explain the difference between organic growth and growth by acquisition or merger
Date posted: July 8, 2018. Answers (1)
- Evaluate the policies that governments could use to deal with market dominance and the abuse of monopoly power(Solved)
Evaluate the policies that governments could use to deal with market dominance and the abuse of monopoly power
Date posted: July 8, 2018. Answers (1)
- Explain why some industries are natural monopolies.(Solved)
Explain why some industries are natural monopolies.
Date posted: July 8, 2018. Answers (1)
- Analyse how government policy could reduce income inequality.(Solved)
Analyse how government policy could reduce income inequality.
Date posted: July 6, 2018. Answers (1)
- Explain what is meant by the distribution of income.(Solved)
Explain what is meant by the distribution of income.
Date posted: July 6, 2018. Answers (1)
- Using appropriate examples, explain some of the methods a government could use to increase the consumption of merit goods.(Solved)
Using appropriate examples, explain some of the methods a government could use to increase the consumption of merit goods.
Date posted: July 6, 2018. Answers (1)
- Explain what is meant by a merit good(Solved)
Explain what is meant by a merit good
Date posted: July 6, 2018. Answers (1)