John Powell | Dept of Strategy & Management | Leicester Business School
last updated 24/3/09
Teaching on this module passed to Parmjit Kaur from 2005 and has now been returned to me from 2009.
As a general introduction, have a look at the BizEd site - very useful for all sorts of economics and business info (and which has provided some worksheets). The economics materials are outlined here.
Look for 
next to articles
on the home page and the Economics
in the News archive. These will be relevant to you.
Following session 1, have a look atBizEd's introduction to the economic problem.
17/12/08 Opec surprises with cut of 2.2m barrels a day Opec ministers today surprised the oil markets by agreeing to slash production more deeply than expected in a desperate bid to push up the oil price. The petroleum cartel, led by Saudi Arabia, promised to take 2.2m barrels a day out of the market in a move heralded by one analyst as "the end of the bear market". [G]
27/1/09 Britain's big polluters accused of abusing EU's carbon trading scheme Britain's biggest polluting companies are abusing a European emissions trading scheme (ETS) designed to tackle global warming by cashing in their carbon credits in order to bolster ailing balance sheets . The sell-off has helped trigger a collapse in the price of carbon, making it cheaper to burn high-carbon fossil fuels and leading to a fall in the number of clean energy projects. The moves were seized on by environmentalists and other critics who have previously criticised the European Union's ETS for delivering more windfall profits for business than climate change. [G]
14/1/09 Mandelson insists Royal Mail part-privatisation will go ahead Business secretary says government will press on with plan to bring 'gale force of fresh air' to state-owned company's management structure ... As Labour rebels geared up for a fight over the proposals, the business secretary said that, with the government already prepared to take on responsibility for the state-owned company's ballooning pension fund deficit, it was too much to expect the taxpayer to take on the whole burden of financing the modernisation of the company. [G]
Global recession - where did all the money go? Interactive explanation of the structure of the debt pryramid we're now underneath ...
Bank of England Monetary Policy Framework – a fairly straightforward commentary on monetary policy
18/2/09 Bank of England gives full support to printing money Policymakers at the Bank of England voted unanimously earlier this month to start the process of quantitative easing by buying gilts and other securities. Minutes for the Bank's monetary policy committee's February meeting, published this morning, showed that all nine members of the MPC agreed that the Bank needed to act now to try and get credit moving through the UK economy again. [G]
22/1/09 Greed—and fear: A special report on the future of finance The golden age of finance collapsed under its own contradictions. Edward Carr asks why it went wrong and what to do next... When the financial system fails, everyone suffers. Over the past 22 months the shock has spread from American housing, sector by sector, economy by economy. Some markets have seized up; others are being pounded by volatility. Everywhere good businesses are going bankrupt and jobs are being destroyed. For the first time since 1991 global average income per head is falling. Even as growth in emerging markets has come to a halt, the rich economies look set to shrink. Alan Greenspan, who as chairman of America’s Federal Reserve oversaw the boom, calls the collapse “a once-in-a-half-century, probably once-in-a-century type of event”. Financial markets promised prosperity; instead they have brought hardship... In 2006 America’s current-account deficit peaked at 6% of its GDP (see chart 1). Between 2000 and 2008 the country received over $5.7 trillion from abroad to invest, equivalent to over 40% of its 2007 GDP. Over the same period Britain and Ireland absorbed around a fifth of their 2007 GDPs and Spain a vast 50%. The financial system had the job of recycling the money to borrowers. Inevitably, credit became cheaper and savings declined. In America savings fell from around 10% of disposable income in the 1970s to 1% after 2005. [Economist]
50: D
51: i) fall; AS moves left ii) rise; AS moves right iii) rise; AD moves right iv) fall AD moves left
52: B
53: i) -$20bn ii) -$5bn iii) -$11bn iv) -$18bn
54: B
55: C
56: i) F ii) T iii) F iv) F
57:D
58:C
59:i) T ii) F iii) F iv) T
60:i) injections are Domestic fixed capital formation, Government consumption expenditure, exports ii) Slow GDP growth would be expected to: lower level of employment, reduce government budget surplus, lower level of imports
Good luck with your tests.