Category: Essential Economics for Business 7e and 6e
The Chancellor Alistair Darling announced in February that Northern Rock – the beleaguered bank – was to be temporarily nationalised. The government had been unable to agree terms with prospective buyers and so decided that temporary nationalisation was the best way to proceed. The move has met with sharp criticism from shareholders and many commentators, but was supported by the Liberal Democrats who had argued from the outset that this was the best solution to the crisis.
Northern Rock shareholders will argue that nationalisation is theft Times Online (20/2/08)
Reaction to Northern Rock nationalisation Guardian (18/2/08)
‘Our shares are worthless’ say the Rock’s furious investors Times Online(18/2/08)
Northern Rock reclassified as public company Guardian (7/2/08)
Northern Rock staff warned of job cuts Guardian (7/2/08)
Q&A: Nationalised Northern Rock – what next? BBC News Online (18/2/08)
Northern Rock crisis (Special Report) BBC News Online
Video
Northern Rock nationalisation BBC News Online (February 2008)
Questions
| 1. |
Explain what is meant by nationalisation. |
| 2. |
Examine the advantages and disadvantages of privatisation. Why was privatisation introduced as a strategy in the 1980s? |
| 3. |
Discuss the advantages and disadvantages of temporarily nationalising Northern Rock. |
In the article below, Ashley Seager from the Guardian argues that the government is doing little to encourage the take-up and adoption of alternative forms of energy generation for households. Indeed he argues hat the situation has got worse and not better in recent months with changes in the system. Only 270 houses were helped with the fitting of photovoltaic systems last year. In Germany the equivalent figure was 130,000.
Reasons to see red over green energy Guardian (18/2/08)
Questions
| 1. |
Assess the external costs and external benefits resulting from installing a photovoltaic electricity generation system on a house. |
| 2. |
Using diagrams as appropriate, show how the installation of photovoltaic cells on houses will alter the socially optimal market equilibrium. |
| 3. |
Evaluate two policies that the government could use to encourage the more widespread adoption of alternative methods of generating power. |
Microfinance is a topic we have addressed before in these news items and we make no apologies for returning to it again. The articles linked to below include an interview in the Guardian with Muhammad Yunus, the Nobel prize-winning founder of the Grameen Bank which is credited with lifting millions out of poverty with small loans – microfinance. There is also a podcast from Mervyn Davies the Chairman of Standard Chartered Bank Plc.
Microfinance and financial inclusion Times Online podcast (18/0/07)
Microfinance and financial inclusion (transcript for podcast) Times Online (18/0/07)
What’s the big idea? Guardian (16/2/08)
Questions
| 1. |
Explain what is meant by ‘microfinancing’. |
| 2. |
Discuss the likely effectiveness of microfinancing as a tool for promoting economic development (as opposed to economic growth). |
| 3. |
Evaluate two policies other than microfinancing that will help to promote economic development. |
Researchers at the California Institute of Technology have shown that a person’s enjoyment of wine is heightened if they are told that the wine is an expensive one. So what are the main factors determining the demand for wine? Is it really the taste or is it simply the expectation resulting from the price?
Raising a glass to pricey wine BBC News Online (14/1/08)
High price makes wine taste better Times Online (13/2/08)
Why expensive wine tastes the best Metro (13/2/08)
Questions
| 1. |
What are the main factors determining the demand for wine? Assess the relative importance of each of these factors in the overall level of demand. |
| 2. |
Analyse how utility theory can help to explain the level of demand for more expensive wine.
|
| 3. |
How would marginal utility and market demand be affected by the knowledge that bottle of wine is a relatively expensive one? |
The government has proposed charging a levy to people who claim non-dom (non-resident) status in the UK. This levy of £30,000 will be charged on people with non-dom status who choose to shelter their earnings in overseas tax havens. An intensive campaign against the tax has been launched by various elements of the media.
It’s hardly Bolshevism to propose taxing non-doms Guardian (9/2/08)
Treasury adviser Bob Wigley slams non-dom tax Times Online (10/2/08)
Nabbing the non-doms Times Online (10/2/08)
Jones breaks ranks to claim non-dom plan hits low-paid Guardian (9/2/08)
Non-dom crackdown could hit low-paid Guardian (8/2/08)
Questions
| 1. |
Explain the way in which the non-dom tax levy would operate. How would this levy be classified – progressive, regressive or flat-rate? |
| 2. |
Assess the arguments for and against the imposition of a levy on non-doms. |
| 3. |
Evaluate two alternative policies for the taxation of non-residents of the UK. |