Inflation is when there is a rise in average price level. It is measured by the CPI which tracks the monthly prices of a weighted average basket of goods and services. If inflation was very high, and above the 2% target rate, this would be damaging to the UK economy. If prices are constantly rising, it is very likely that wages are not rising as often. If this is the case, disposable incomes would be falling as consumers would have less money left over after their normal spending. This would lead to a decline in living standards. Workers may ask firms for higher wages. Firms could then choose to increase wages and push prices up even more, or firms could lay-off workers. If firms decide to lay-off workers, then this would cause an increase in the unemployment rate.
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A-Level Economics | Demand and Supply
What is demand?
* demand is the number of goods and services that people are willing and able to buy at each price
What is the relationship between price and demand?
* downward sloping (inverse
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A-Level Economics | Quantitative Easing
* quantitative easing is when
* the central bank creates money electronically
* the central bank uses this to buy back government bonds from commercial banks
* banks willing and able to lend more money
* money supply
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Tradeable Pollution Permits | A-Level Economics Model Paragraph (AQA, Edexcel, OCR)
In order to reduce negative externalities in production, such as when the production of goods and services cause pollution (CO2 emissions), the government can begin by researching the size of the market failure,