Government borrowing is high. To meet the shortfall the Govt may have to increase taxes. This would have the effect of reducing consumer spending. 5. Global downturn. If the world economy slows down there will be less demand for British exports and also reduced economic confidence. This is very significant with increased globalisation of the world economy...
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It is argued interest rates are being kept artificially low by the demand by China and other Asian countries to buy UK and especially US debt. If for whatever reason this was to end. Interest rates would rise to try and combat the imbalances in the current account and domestic levels of savings. 7. Rising price of oil...
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Economics This lower money growth leads to lower cash balances which in turn lead to lower output growth in the economy. This decrease in output growth, however, has an effect on the unemployment rate and that is to increase it and this increase in the unemployment level leads to a reduction in the price level in the economy and thus a fall in inflation...	3 / 627
Relationship between interest rates and price of bond Keynes believes that people want to hold the same real amount of money. So, as nominal prices of goods increase, people will want to hold more money. This change in demand for money can be seen in Figure 3 whereby an increase in demand for money shifts the demand curve of money to the right from Md1 to Md2...	4 / 857
Macroeconomics Reserve requirements are the percentages of precise kinds of deposits that banks must keep in their vaults or deposit at a Federal Reserve Bank. Banks and other institutions keep a certain amount of funds in reserve to meet unforeseen outflows...	1 / 261
The factors mentioned in articles can cool down the inflation. Raising the interest rate is also equal to decrease the purchasing power. Job market and some actions of companies is involved in cost-push inflation...	2 / 415