EconomicsWithAneesh

Whats the difference between tax evasion and avoidance? Introduction/main thoughts: We saw Reeves deliver her spring statement on Wednesday. He  strategy to balance the books by reducing public spending aims to address the deficit but is straining small businesses and limiting market growth. Whilst she boasts about rate cuts offering some relief, her focusing on short-term fixes might sustain inflation and lower productivity, adding to an interest burden of around £104 billion. A more balanced approach could include a 2 percentage point corporate tax cut(potential of +150,000 jobs annually) and a £1.5 billion investment in infrastructure and R&D to boost productivity by 3 to 5% over time. Tough one, but she's doing a decent job. Main Policies: Welfare:  Projected to result in net savings of £3.4bn by 2029-30 but will push 250,000 more people, including 50,000 children, into relative poverty. Spending Cuts:  Day-to-day departmental spending will be reduced by £3.6bn by...

Explain the likely effects of imposing indirect taxes on alcohol [10 marks] Alcohol is a demerit good, a good that has a greater private benefit than social benefit which leads to a loss of welfare in society. Indirect taxes come in two types: ad valorem, which is a price imposed for each transaction(such as VAT) and specific taxes that aim to make consumption less viable.  Through the use of Figure 1, I have shown the effect of imposing a specific tax (tax per unit) onto alcohol the tax has caused the price of alcohol to move from P1 to P star and hence reduce the quantity demanded of alcohol. This increase in price will affect consumers and producers. There will be a reduction in the number of consumers that possess effective demand for alcohol which may cause them to stop drinking alcohol or move to the substitutes. This depends on how inelastic consumer demand is as if demand is highly inelastic consumers may still pay the higher price for their example exacerbating the problem...

"Think of a recent decision that you needed to make. Discuss how insights and tools from economic theory and analysis might have been helpful in making the decision." [Essay Competition-    awarded a certificate of commendation and a trip to Cambridge ] Sitting with my family at our favorite restaurant, I was confronted with a menu and faced with what seemed like a simple task: choosing what to eat. As I scanned through the options, I quickly realised this was anything but easy; with so many choices and limited time, I found myself applying economics to make the best decision I could. When choosing a drink from the menu, I understood how several principles of behavioral economics had been implemented, and I was not to be fooled! I immediately noticed price anchoring was being used; the presence of a higher price option which acts as an anchor, making the other drinks seem relatively cheaper. If I originally thought £2.50 was expensive for a soft drink, seeing £20.00 at the st...

How does monetary policy work? Explain how monetary decisions affect main macroeconomic outcomes such as the nominal GDP and inflation? [Essay Competition] Monetary policy is used by central banks to try to achieve macroeconomic outcomes: stable and sustainable economic growth, levels of inflation around 2%, low rates of unemployment and equilibrium on the balance of payments of a nation. Founded in 1694, the UK’s central bank, the Bank of England, through regulating the supply of money and interest rates, aims to achieve the former objectives. There are two types of monetary policy: expansionary, which is used to stimulate economic growth, and contractionary, which is used to reduce inflation and stabilise the economy. My essay shall initially explore what the macroeconomic outcomes are, explain how monetary policy operates and then will proceed to connect both points together. Economic growth is arguably the most important macroeconomic outcome, as it drives improvements in living st...

Introduction Here are some useful application points that I may want to refer back to nearer my exams. I have taken these from the Deloitte Monday Briefing where Ian Stewart explains what is going on in the economy for the week and other sources such as the FT and the Economists, and sometimes even what my best friend, Danny, tells me on the walk to school each morning. March 3rd: Gold: The twenty-first century has been good for gold, with its price having risen tenfold from the lows seen around the millennium. Interest rates remain high compared to most of the last 15 years, meaning holders of gold miss out on significant interest income. Gold yields no income and incurs costs for safe storage. It also has limited practical use, with only about 10% of gold production being used in industry, mainly in electronics and medical applications . Though gold has served as a medium of exchange since ancient times, by 1924, John Maynard Keynes famously dubbed it "a barbarous relic." T...