Sean Coston
14139376
Economics 120
Assignment 1
The Macroeconomic performance of the United Kingdom
Introduction to the United Kingdom:
The UK is a country that is technically an island. It is located on the most western side of Europe. Their chief of state is the Queen and the prime minister is the head of the government. The United Kingdom has one of the most advanced open market economies where a free price system is used to determine prices of all goods and services associated with them. They are also part of the EU or European Union and has the strongest money rate of all countries. Where a single Pound can go for as much as R16. (Introducing the United Kingdom)
Economic growth:
Being the
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Even with the rise in unemployment, the Pension Minister, Priti Patel, said that there are jobs out there and it is not the fault of the economy but of the people too lazy to find a job or do the effort of going to their jobs and getting fired.
(bbc news)
Price Level:
Price leveling meaning a comparison of United Kingdoms prices with that of any other country. Not to rank countries against one another but purely to inform what prices on one item is against the price of the same item in a different country.
The United Kingdom sits on a very high price level meaning it has one of the strongest currencies in the world. One pound gives you about R19 in equivalent. This makes its prices on goods and services subject to a rise against other countries.
United Kingdom will be equal to 100 and then where the prices are more than 100 it will be much more expensive and where it is below 100 it is much cheaper than other good.
Some examples:
UK=100 against
• Australian dollar- 96
• New Zealand- 85
• United States- 82
Thus we can see all these first world countries are still at a lower price level than the United
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But even with the viable explanation to the drop in investments, economists are still scared of the United Kingdoms unbalanced system within the ever changing economy. Business investments did eventually rise to 2.9% point to the growth and still growing each quarter. (UK economy) (htt2)
Trade:
Trade is a big part of the United Kingdoms success and growth, but because of the high price level of the pound, exporters were struggling to get the demand required.
But since the last quarter, United Kingdom exports went up by a full 3.9% and still rising each quarter. The total trade market made a 1% point to the growth which is the most since the year of 2011. There is a reduced inventory which cancels out the trade and the effect it had. (FT) (Appointment Bilanguange)
Government Expenditure:
Government has spent countless money on general things to make the country a better, safer and healthier place.
In Pounds:
Pensions up to 149.8 billion
Health care- 134.1 billion
Education- 84 billion
Defence- 45.3 billion
Welfare- 111.1
The purchasing power parity implies the following relationship between the home (GB £) and local (US $) costs of debt:
In the early years of the British Colonies, business and trade were very important because they were major factors of growth. Therefore, there had to be little barriers to trade in the newly founded colonies, and the...
Increased inexpensive imports led to business failures, bank closures, and unemployment in cities. Britain ended The War of 1812 with America and trade increases. Britain’s industrial capacity exceeded Americas’.5 Britain then exported its surplus of manufactured goods to America. U.S. factories could not compete with Europe’s low labor costs and low price of goods. American imports rose from $12.9 million in 1814 to $151 million in 1816. Businesses were forced to close.
When one is to view the view the information pertaining to the trade existent between the United States and Europe, one finds an interesting change in the quantity of such interaction between the years of 1914 and 1916. This data demonstrates that trade with Great Britain rose from $594 million in the former year, to $1,527 million in the latter; while that with Germany decreased from $345 million to less than $1 million. (Document B) Thus,...
The law of one price is ease to test in the same country, this is done through comparing the prices of goods; example, is the price of a meal the same in different cities within the same country (Port of Spain, Chaguanas, San Fernando) or within Trinidad’s sister island Tobago? The theory indicates that prices ought to be homogenous throughout. Conversely, the comparison of prices between different countries where different currencies are used tends to be a lot more difficult; however, this can still be done by looking at international currency markets where traders exchange currencies at some rate of exchange depending on the demand and supply of each c...
Trade, of course, is only part of a larger network of relationships between our two countries. This network evolves in response to many complex influences, and exporters need to consider how our two countries' ever-expanding, ever-changing relationships will affect their activities. To take just a few examples:
The United States is the leading economy across the globe and experienced several tribulations in the recent past following the 2008 global recession. Despite these recent challenges, there are expectations among policymakers and financial experts that the country will experience solid economic growth. Actually, financial analysts have stated that the U.S. economy will be characterized by increased consumer spending, increased investments by businesses, reduced rate of unemployment, and reduction in government cut. Some analysts have also stated that the country’s economy will strengthen in 2014 with an average of 2.7 percent or more. However, these predictions can only be understood through an analysis of the current macroeconomic situation in the United States.
Due to the various options of distribution channels their prices vary. Consumers take that into consideration when purchasing their products.
exchange rates, etc). Aside from this quibble, the heart of the matter is to what degree
and is symptomatic of a weak economy. A low inflation rate of 1.4% in November
The United Kingdom of Great Britain and Northern Ireland, commonly referred to as the United Kingdom, or “UK” for short, is a country located in Western Europe. It rests between the North Atlantic Ocean and the North Sea and is a medium sized country, ranked 80th in the world based on its size of 243,610 km2 (CIA 1). It has a temperate climate, with rugged hills and low mountains. The Fens is the lowest point in the UK at four meters below sea level (CIA 4). In contrast, the highest point is in Ben Nevis, at 1,364 meters above sea level (CIA 9). In the east and south-east, the land is made up of mostly plains. Only about a quarter of the land in the UK is suitable for growing crops, but there are many natural resources in the region. Some of these resources include coal, petroleum, gold, and more (CIA 12). The diverse resources in the United Kingdom help to keep its’ economy stable.
...stinguish that a qualitatively new type of worldwide trade was developing. The illustration in United stated since the late of 1980 showed that “has less productive portions moved offshore which lead to a decrease in employment while maintaining higher value-added parts. Consequently, all the productivity has risen, while the tradable sector has increased employment” (Spence and Hlatshwayo,2011).
If interest rates in the United States increase more than UK, I feel that global investors will definitely get a higher return from investing in the US, therefore investments will raise or increase and the demand for the dollar will rise relative to Pound. The outcome will be a higher price of a dollar. Now the dollar will appreciate and become stronger and pound will depreciate and become weaker. This is not a good sign for the UK at all.
Running The British Economy Introduction = == == == ==
Conclusively, all of the policies discussed have both advantageous and disadvantageous affects, and so there currently is no definite answer to the problem. Inflation can be reduced; however doing so would sacrifice the fragile recovery of the British economy. The government must therefore decide which process is more important for the long-term health of the British economy, and decide on the policies that will best improve either situation. Either way, living standards are set to fall, and real income will also decrease in the foreseeable future.