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What is the relationship between income elasticity of demand and a normal and inferior good?

Firstly, we must define what income elasticity of demand means. This is the responsiveness of the quantity demanded of a good to a change in income. A normal good is characterised by a positive income elasti...
CB
Answered by Cameron B. • Economics tutor
3844 Views

Explain the difference between fiscal policy and monetary policy.

Firstly, let's define each Government demand side policy. Fiscal policy is the use of taxation and Government spending to control aggregate demand and hence growth. Monetary policy is the use of interest rat...
EL
Answered by Ella L. • Economics tutor
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Define Price Elasticity of Demand (PED) and explain what inelastic PED means for a good.

Price elasticity of demand is the responsiveness of quantity demanded to changes in price in the market.If PED was to be inelastic, price changes have a small effect on changes in quantity demanded.
OW
Answered by Owen W. • Economics tutor
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Explain the effect on the Pound if the MPC decides to increase the base rate of interest.

The base rate of interest is the interest rate set by the Bank of Englands monetary policy committee (MPC) in order to stimulate the economy in the way the government sets out . The base rate of interest bei...
JM
Answered by Jasper M. • Economics tutor
2251 Views

What are supply side policies and how do they effect the economy?

Supply side policies focus on the production side of the economy which can be manipulated by taxes, regulatory policy or monetary policy (interest rates/ supply of money). These policies are important for th...
LA
Answered by Laura A. • Economics tutor
2900 Views