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What impact would a cut in the base rate by the Bank of England have on Aggregate Demand?

The components of Aggregate Demand are: Consumption, Investment, Government Spending and Net Exports. A cut in the base rate would mean that Aggregate Demand will increase, shifting outwards. A reduction in ...
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Answered by Georgie K. • Economics tutor
1835 Views

What are the conditions of perfect competition?

We define a perfectly competitive market as a market which fulfils the six following conditions: 1) Large number of sellers and buyers. 2) Homogenous product: All of the goods sold within the market are iden...
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Answered by Ethan B. • Economics tutor
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Explain how monetary policy can be used to prevent business cycles

There are two phases of business cycles: first, when the economy is expanding faster than the trend rate of growth, and second, when the economy is expanding slower than the trend rate of growth. When actual...
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Answered by Frank M. • Economics tutor
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Demonstrate the impact on the UK of a devaluation of the pound

A devaluation is where a currency looses value compared to other currencies. For example the pound fell nearly 20% after the Brexit vote.Firstly, the devaluation will cause the price of imports to rise and t...
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Answered by Monty G. • Economics tutor
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What would be the effect on the UK Economy of an increase in the Bank of England Base Rate?

AD=C+I+G+X-M1) Increased cost of borrowing-Consumption Variable rate mortgages will now have higher monthly interestrepayments. This leads to a decrease in disposable income for consumers.Consumers will ther...
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Answered by Alex N. • Economics tutor
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