Economics Flashcards
Who did Keynes influence?
He was part of Lloyd George’s think tank
What does Keynes admit about economics?
Economics is complicated but should not stop governments intervention
What does Keynes believe government should do regarding economics?
That it is the moral duty of government to ensure steady growth
Unemployment is a moral evil
What does Keynes admit about capitalism?
That it is the best system however needs help
Fiscal policy
Accepts borrowing
Multiplier effect
Smoothing out the bumps in the road
What does Keynes believe about government spending?
“Expenditure creates its own income” Keynes
When was the busketalism?
Post war - 70’s
Focus on unemployment
Links to beveridge
Why is Keynes rejected in the 70’s?
Stagflation under Callahan
Rejects Phillips curve
What idea takes over in the late 70’s?
Friedman- Chicago school
Does Keynes return?
Yes in recent years. Part nationalisation of banks Big Govt spending HS2 Increase in borrowing Quantitive easing Low interest rates
What does Keynes say to do in times of recession?
Cut tax
Borrow more
Spend more
What does monetarism focus on?
Inflation
Why is unemployment not the key goal in monetarism?
Workers won’t demand pay rises so won’t price themselves out of the market
What theory did Friedman use to what causes inflation?
Velocity of circulation
What is the solution to slow down the movement of money?
Raise interest rates
Who adopted monetarism?
New right
Regan and Thatcher
Is monetarism popular with the voter?
No, voters prefer a focus on unemployment
When did Britain try to join the EU?
In the 60’s
Under Wilson and Heath
Who opposed the EU in the 60’s?
Enoch Powell
Gaitskell (labour) “End of 1000 years of history”
When did we join the EU?
1973 Heath
Did we get a good deal to begin?
No, the UK made a large contribution but was one of the poorest members at the time
What are some of the opposition views to the EU?
Parliamentary sovereignty
Increases unemployment
Loss of British values
Points for first referendum?
Called by Wilson to unite party
Tory’s and Thatcher remain
Remain win by 67%
Thatcher quote on EU?
“A European super-state exercising a new dominance from Brussels”
What was Thatcher a key driver of?
The Single European act 1986
What happens under the major years regarding EU?
Britain opts out of the Euro
Euroskeptisism rises in the media
What happened in the Blair years regarding the EU?
Blair considered the euro- Brown blocked
Spoke of a tragedy for Britain by politicians failing to appreciate European integration
What are the main provisions of the single market?
No protectionism inside No border capitals Free movement of people Mutual recognition of qualifications Equality of taxes
Fact for free movement of people?
55,000 EU citizens working in the NHS
Disadvantages of Single market?
Job losses
Wage reduction
Skills drain
Advantages of single market?
Move of capital
Movement of people and skills
Example for job losses?
UK dairy farmers come under pressure from dairy farmers in Romania
When was the Euro launched?
2002
Advantages of joining the Euro?
Eliminates the exchange rate risk Price transparency- better comparison Reduced transactional cost Greater mobility for workforce Single monetary policy
Disadvantages of the Euro?
Loss of monetary policy- unable to influence AD levels
Differing Economies- UK is very sensitive to interest rate policy
Recession
Who country has been bailed out?
Greece
France to Greece nearly 9 billion Euros
What approach did Thatcher have towards debt?
“Housewife approach”
What was Gordon browns nickname?
Prudence brown
Statistics for the U.K. And debt?
In 2000 the average person owed 160% of their household income
Total private debt- £1.6 trillion
Fact to show the increase in private debt?
Average person in the U.K. owes appro £54,000 this was £29,000 10 years ago
How was private debt allowed to increase?
Loosen regulation of banks under Thatcher Growth of home ownership Increased forms of borrowing E.g.- credit cards and short term loans Embourgiesement
We have a free market in the U.K.?
Thatcherism- Education and privatisations
Blair and 3rd way- using free market to provide high quality public services
City of London
UK post brexit
We have regulated market in the U.K.?
EU membership
Utilities and housing market
Response to 2008
Minimum wage
Parties do follow the same economics policy?
Privatisations- Blair and Thatcher
Supply side economics- Blair and Thatcher
Response to 2008- Neo Keynesianism
How much were the banks bailed out post 2008?
124 billion
What policies showed neo-Keynesianism?
Labour tax cuts- 2008 and 2009 tax acts saw large temporary cuts to the majority of households
All 2 parties support HS2- multiplier effect
Which supply side economics did Blair do?
Education reforms
Harsh on trade unions
How has May shown supply side?
T levels
Grammar schools
How has corbyn shown supply side?
Small business tax cut
Free tuition fees
Parties disagree on economic policy?
Taxation
Welfare spending
Intervention in free markets
How do Labour and Tory disagree on utilities?
Labour- nationalise energy industries
Conservatives- make it easier to compare tariffs
How to labour and Tory disagree on employment?
Tories have done nothing to stop 0 hour contracts
Corbyn pledged to end them
The UK does have a free market?
Thatcherism- free market in education
Blair and 3rd way
The city of London
Describe the city of London?
Big Bang started by Thatcher- followed by brown
Cut no. Regulators to reduce power of watchdogs
Needed to attract banks to London in a globalised world
What did the 3rd way implant?
Compulsory competitive tendering
We have a regulated market in the U.K.?
EU membership
Post 2008
Minimum wage
Regulation on banks post 28?
Limits to bankers bonuses
Bank levy- an annual tax on balance sheets
Financial services bill- a ring fence if a if a bank fails
What is an open economy?
Free movement of goods and services moving in an out of the country
Competes with countries across the globalised world
Immigration and emigration of workers
More choice of products for consumers
We do have an Open economy in the U.K.?
EU membership
Financial interconnectedness
Foreign owned companies
MNC’s
The UK has achieved a low inflation, low unemployment economy?
Tony Blair Neo-Keynes post 2008 Demand side Supply side Open economy
