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Explain why an increase in labour productivity is likely to reduce the deficit on the current account of the balance of payments.

A current account deficit arises when import expenditure exceeds export revenue. An increase in labour productivity implies that there is an increase in efficiency in production and also a rise in output for...
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Answered by Tom E. • Economics tutor
16835 Views

Consider the Supermarket Industry. Tesco dominates the market with a 43% market share. Its closest rival is Sainsbury's with 19% of the market. Outline the potential costs and benefits of a merger between the two supermarkets.

Benefits: Economics of scale- shown on graph (movement to lower part of LRAC curve) can potentially pass on cost savings Profitability shared resources High tax revenue for the government Costs: Monopoly pow...
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Answered by Himesh V. • Economics tutor
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Does currency devaluation lead to an increase in export revenue?

Let us assume a country with a fixed exchange rate such as Hong Kong. As devaluation only works when there is a fixed exchange rate, which is not governed solely by market forces (S&D). This allows for a...
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Answered by Gleb P. • Economics tutor
4562 Views

Explain how government spending can lead to an increase in economic growth

Short run economic growth is known as Aggregate demand, otherwise known as GDP. Long run economic growth is known as Aggregate supply, otherwise known as real GDP. Government spending is a compenent of the a...
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Answered by Hassan H. • Economics tutor
5471 Views

Explain how an increase in interest rates may affect aggregate demand in an economy

The first thing to do is define aggregate demand and interest rates. The interest rate is the cost of borrowing and the benefit of saving—the extra money (expressed as a percentage) to be paid back on top of...
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Answered by Joe H. • Economics tutor
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