Thursday 13 September 2007

Article Abstract

In this article, the british prime minister has refused to raise the wages of his government workers in order to stop AD from shifting out because it counts as government spending. Also, if the wages are raised AS is also shifted out, therefore the end result is only that the price level is raised with no increased output. The government spending would cause a crowding out effect because the british government is deficit spending. The crowding effect would cause no long term economic growth.

Tuesday 11 September 2007

The "Best Article in the World"

Brown firm over public sector pay

Press Association
Monday September 10, 2007 2:53 PM

Gordon Brown has risked the wrath of the unions by insisting he would not undermine the economy by making "unaffordable" promises on pay.

Amid growing discontent over public sector wage deals, the Prime Minister said financial "discipline" was essential to maintain growth.

In his first speech to the Trades Union Congress since entering No 10, Mr Brown also outlined plans for bringing the UK closer to full employment than ever before, with a crackdown on migration to ensure "British jobs for British people".

Mr Brown said the Government would "always put stability first".

"No loss of discipline, no resort to the easy options, no unaffordable promises, no taking risks with inflation. So let me be straightforward with you - pay discipline is essential to prevent inflation, to maintain growth and create more jobs - and so that we never return to the old boom and bust of the past," the Prime Minister said.

Mr Brown said that if inflation was allowed to get out of control, the country could go back to the "same old familiar pattern" of spiralling prices, high unemployment and public spending cuts that there had been under the Tories.

"Because this Government will take no risks with the economy I'd only make promises we can afford. For me it will be stability first, now and in the future - stability yesterday, today and tomorrow - and that will mean more jobs."

Mr Brown said he hoped this could be "Britain's century", and wanted to see the economy move towards producing highly skilled posts rather than lower skilled.

He put forward a package of measures which would be implemented "rapidly" to create 500,000 jobs. Previously a lack of available posts was the major barrier to people working, but now there were more than 650,000 vacancies waiting to be filled, he said.

"The bigger barrier to full employment is not the lack of jobs but the lack of skills," he said.

Copyright (c) Press Association Ltd. 2007, All Rights Reserved.

Friday 7 September 2007

Unit 3.5 Definitions

Unemployment - the failure of an economy to fully employ its labour force.
Umeployment rate - The percentage of the labour force unemployed at any time.
Costs of Unemployment - Loss of potiential goods and services, unequal burdens, emotional distress
Types of Unemployment - Frictional: workers who are either waiting for jobs in the future or currently searching for them. Structural: Workers who have been laid off because their skills are now obsolete and have been replaced by machines. Seasonal: Workers who have jobs in the winter and summer but do not in the months between. Cyclical: Unemployment caused by insufficent total spending or by insufficient aggregate demand.
Inflation - A rise in the general level of prices in an economy.
Types of inflation - Cost push: Increases in the price level caused by increases in resource costs. Demand pull: Increases in the price level resulting from an excess of demand over output at the existing price level. Excess monetary growth: An increase in the price level caused by an increase in the supply of money causing it to be worth less.
Costs of Inflation - Decrease in real income, Increased costs of production

Monday 3 September 2007

Interest Article

http://www.moneymarketing.co.uk/cgi-bin/item.cgi?id=149038&d=340&h=341&f=342