Category: Economics for Business: Ch 30
Concerns have been growing that the UK faces a downturn in economic growth during 2008. The articles below consider this possibility. With a credit crunch taking place and manufacturing output falling, the concerns for a recession may well not prove unfounded.
Is this the big one? Guardian (3/1/08)
Your survival plan if a recession strikes Times Online (5/1/08)
Top of the flops – 10 pointers to a downturn in 2008 Guardian (6/1/08)
Recession fears as manufacturing drops Times Online (11/1/08)
Crash that ‘won’t happen here’ looms large Guardian (3/12/07)
Questions
| 1. |
What are the key indicators of an impending recession? |
| 2. |
Assess the likelihood of a recession in the UK in 2008. |
| 3. |
What policies could the UK government adopt to avoid a recession during 2008. What would determine the success of such policies? |
The article below by William Keegan is a discussion of a recent seminar he attended on ‘Black Wednesday and the rebirth of the British economy’. The seminar led him to consider whether policy makers should be guided mainly by rules or discretion in the development of policy. Many would argue that we have moved away from discretion and moved more towards fiscal and monetary rules for the implementation of policy, but the article discusses the extent to which this may be true.
When the going gets rough, can our rulers rely on the rule book? Observer (18/11/07)
Questions
| 1. |
Explain, using examples as appropriate, the difference between policies based on fiscal and monetary rules and discretion. |
| 2. |
Explain how the MPC “largely ignores the cumulative dangers of a high exchange rate” in its determination of interest rates for the UK economy. |
| 3. |
Discuss how effective the adoption of an inflation target has been in management of the British economy in the past decade. |
The Governor of the Bank of England, Mervyn King, has signalled that the next year may be the toughest for 15 years with lower economic growth than previously forecast. So, is the UK economy going off the rails?
Questions
| 1. |
Explain the main reasons why the Governor of the Bank of England expects a worse than forecast level of economic growth in 2008. |
| 2. |
Discuss the extent to which a cut in interest rates will help prevent an economic slowdown. What adverse effects could follow from such a policy. |
| 3. |
Discuss one other policy that the government could adopt to try to reduce the extent of the forecast slowdown in economic growth. |
The article linked below is a blog article by George Monbiot looking at the rise of neoliberal economic views and discussing whether these are simply an intellectual justification for the rich and powerful to reinforce their position.
How the neoliberals stitched up the wealth of nations for themselves Guardian (Comment is free) (28/8/07)
Questions
| 1. |
Write a brief summary of the neoliberal views of the founder of the Mont Pelerin Society – Friedrich Hayek. |
| 2. |
Explain the neoliberal argument that “….. we are best served by maximum market freedom and minimum intervention by the state. The role of government should be confined to creating and defending markets, protecting private property and defending the realm.“ |
| 3. |
Discuss the view espoused by George Monbiot in the article that neoliberal policies like “minimal taxes, the dismantling of public services and social security, deregulation, the breaking of the unions” serve to make the elite even richer and simply act as a “wealth grab“. |
Now that Tony Blair has announced that he is to step down as Prime Minister, the media has started to consider his legacy. The two articles focus on the economic legacy. While the BBC one is quite factual in its approach, the article by Larry Elliott from the Guardian is less complementary about his legacy.
The business of Tony Blair’s decade BBC News Online (10/05/07)
Blair’s legacy: a fantasy island trying to live beyond its means at every level Guardian (14/05/07)
Blair’s economic record (video) BBC News Online (10/05/07)
Questions |
| 1. |
Explain why Larry Elliott considers that we are living on a ‘fantasy island’. |
| 2. |
Explain the main economic changes that have been implemented during Tony Blair’s time in office. |
| 3. |
Discuss the extent to which the economic situation has improved under Tony Blair for (a) firms and (b) consumers. |