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What is elasticity and why does it matter to economists?

Elasticity is, in general terms, the amount supply or demand will react to a change in another variable such as income or price. It is very important to economists as it will allow them to estimate economic ...
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Answered by Aodhan B. • Economics tutor
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Why have Central Banks introduced Quantitative Easing? What other policies have been introduced in the 21st Century?

Central Banks have introduced Quantitative Easing (QE) as an additional mechanism to stimulate inflation in the economy.The two mechanisms that drive inflation (theoretically as this has not been proven as o...
Answered by • Economics tutor
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Explain the market failures associated with increasing transport use.

A market failure is when an allocation of resources has a negative effect on a third party that is outside the market mechanism. The third party effects are negative externalities. Increasing transport use h...
Answered by • Economics tutor
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What drives inflation and why is it essential to modern economies?

Inflation is the increase in general price levels in an economy. It is measured by two indices; retail price inflation (RPI) and consumer price inflation (CPI). CPI is the more common measure and measures th...
Answered by • Economics tutor
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Evaluate the likely economic effects of an increase in government expenditure on infrastructure

Since government spending is a component of Aggregate Demand (AD), this expansionary fiscal policy will cause AD to rise. This will be exaggerated by the multiplier effect, whereby an injection into the circ...
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Answered by Tanay V. • Economics tutor
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