EconomicsWithAneesh

A short analysis of the recent Trade Deal: On Thursday, Trump and Starmer signed the "Economic Prosperity Deal" aiming to reduce tariffs and expand market access between the two countries. The 25% steel and aluminium tariffs have been removed, offering a reprieve to our steel industry, which was, a few weeks ago, on the verge of collapse. 1) 25% steel and aluminum tariffs removed: Just weeks ago, the British steel sector was on the brink of collapse, burdened by high production costs and the detrimental effects of U.S. tariffs. The UK government had allocated £94mn to rescue British Steel after taking over its two blast furnaces from Chinese firm Jingye, which had requested £1.2bn to sustain its £2bn green steel transition, while losses were running at £700,000 per day and a total collapse was projected to cost £1bn. This decision by the US offers a crucial reprieve, allowing UK steel manufacturers to regain some competitiveness in the global market.  However, we should not s...

  Assess the view that economic growth always comes with inflation [25 marks]: Economic growth refers to the level of real GDP increasing over a period of time. It is important that this is real GDP and not nominal GDP, as inflation needs to be accounted for to see whether this growth is sustainable or merely limited to the short run. Inflation refers to the tendency of average price levels to increase. It is common for average price levels to increase in periods of economic growth, as consumers have a greater marginal propensity to consume, which tends to lead to demand-pull inflation. Inflation is inevitable as the rate of economic growth increases, especially if demand-side policies such as fiscal and monetary policies are used. If the Monetary Policy Committee decides to lower the UK's base rate, consumers will be incentivised to spend a greater proportion of their income. This means that consumption, which is a component of aggregate demand (C + I + G + (X – M)) and accounts f...