Contextual Analysis (Examples) Flashcards
1
Q
example of low interest rates
A
- after EU referendum
- BoE interest rates reduced to 0.25%
- preemptively to prevent a reduction in GDP growth due to brexit creating uncertainty for the UK economy
2
Q
example of high interest rates
A
- america(2009 to 2020) experiences their longest ever economic expansion
- to prevent demand-pull inflation
3
Q
example of central banks acting as a lender of last resort
A
- 2008 financial crisis
- Federal Reserve lent to several Wall Street banks to prevent insolvency
- Fed decided to not to lend to the Lehman Brothers and allowed them to become insolvent to prevent government failure
4
Q
example of quantitative easing
A
- response to covid
- european central bank announed a 750 bn euro public sector purchase programme
5
Q
example of decreasing corporation tax failing
A
- UK decreased corporation tax by 9% from 2010 to 2019
- investment delayed by uncertainty from Brexit and US-China trade war
6
Q
example of countries following fiscal austerity
A
- 2010-12 european debt crisis
- Greece forced to cut spending and raise taxes to deal with their national debt
- increased unemployment and decreased economic growth by 25%
- training and education spending reduced by 20%
7
Q
example of investing in education
A
in 2019, UK government spent £400 mil on improving schools and pledged to raise teachers’ salaries to £30,000 by 2022
8
Q
example of investment in manufacturing and technology
A
- China ten-year plan
- research and development subsidies in the aviation industry, railway equipment, information technology etc
9
Q
example of policies for the workforce
A
- boris johnson 2020 immigration plan
- allow migrants citizenship if they had sufficient educational qualifications
- higher skilled workforce
10
Q
example of firms moving countries due to tax
A
- UK reduced corporation tax
- appealing to Jaguar Land Rover
- plans to build a warehouse in the west midlands
- contribute to tax rev
- supply jobs
11
Q
example of investment in transport infrastructure
A
- HS2
- increase labour mobility
12
Q
example of a fixed exhange rate
A
- UAE against america
- promote stability of oil prices following several shocks that have triggered global recessions
13
Q
example of managed exchange rates
A
- chinese policy makers cutting interest rates
- incentive for hot money outflows
- Yuan devalued
- exports cheaper = increase demand
14
Q
example of activity not allowed by the WTO
A
- America giving illegal subsidies to Boeing
- reduce firms CoP = lower price to consumers
- adverse impact for the competitiveness of Airbus (european-owned counterpart)
- EU permitted to add tariffs to $4 bn worth of US imports to compensate
15
Q
A
