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Explain why the demand for food has an inelastic PeD.

Food is a necessity, people need it to survive, therefore the demand for food is likely to be unresponsive to a change in price because people still have to buy food reguardless of the cost or they will die....
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Answered by Kate P. • Economics tutor
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Evaluate the use of supply side policies as a means of controlling UK inflation (30 marks)

Definition: Firstly, one must define supply side policies: requires the aggregate supply curve to move to the right - measuring an increase in the factors of production (eg, land, capital); increase in produ...
EH
Answered by Elliott H. • Economics tutor
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Can you explain income elasticity of demand?

Income elasticity of demand (YED) is the relationship between a change in quantity demanded for a good and the change in real income. some goods are normal and some inferior. Normal means a rise in income re...
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Answered by Annabel S. • Economics tutor
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Despite a plunge in the value of Sterling during 2016, the UK managed to post the highest current account deficit on record. Why did the plunge in sterling not translate into a reduction in the CA deficit?

J-Curve Effect: In the short run, the fall in the value of the pound will increase the cost of importing goods and it will take time for demand to shift to domestic sources. In addition some goods cannot be ...
CW
Answered by Callum W. • Economics tutor
2160 Views

How does an increase in the interest rate affect the level of investment?

The key to answering this question is understanding that interest rates determine the cost of borrowing. If you borrow £1000 to buy a car at 10% annualised interest rate, your cost of borrowing would be less...
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Answered by James G. • Economics tutor
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