John Maynard Keynes was an economist born in 1883 who’s ideas fundamentally changed the theory and manner is which macroeconomic practise and policy is conducted. His primary research delved into the effect of government spending on inflation, output and employment, especially in weak economic periods such as during a recession and depression. Keynesian economics is considered a “demand-side” theory that focuses on the dynamic changes of an economy in the short run as aggregate demand stimulation is the primary intention of the theory.

Following the Great Depression, Keynes felt that the pre-existing “classical economics” wasn’t effective in guiding policy makers…


The recent ban on cryptocurrency in China has roped the former lucrative, coin markets into disastrous bear trends whose ramifications are approaching almost $1 trillion being wiped of the market capitalization of the cryptocurrency market as a whole. With individual traders losing millions from their portfolio, it raises the question: why are cryptocurrencies’ value weakly derived, and therefore interdependent, on China, why have they decided to ban coin trading and what does this new legislation mean for the future of the coin market?

Last week, China announced its ban on financial entities and payment companies from offering payment channels or…


Currencies power and worth is determined by their exchange rates with other countries. By the end of this article, I hope that you will understand the determinants of a currencies exchange rates and why economies may opt to for overpriced/underpriced currency as a mechanism to promote economic growth.

Types of Exchange Rate:

Fixed: Currencies that have fixed exchange rates mean that rarely deviate and fluctuations and volatility is rare. This may seem rare in modern markets but this can occur for example the Saudi Arabian riyal which has a fixed exchange rate. This can be achieved when the underlying central bank of the country…


Before I start, I want to solely credit ‘Doughnut Economics- Sevens ways to think like a 21st century economist’ by Kate Raworth for the information I use and for the great insight into how economical thinking has advanced in the 21st century.

When creating models, economics tend to call the perfectly rational agent the Homo Economicus and although we may all embody some aspect of this model, our social image is slightly nuanced from this model because we dont calculate our choices through utilities, instead we estimate them. The problem in this model, is that no human is perfectly homo…


It is common knowledge to know that many of the largest global companies exploit loopholes in the tax system in order to avoid their taxes. These techniques are all legal and there is nothing illegal to what they do yet ethically, it is unfair and is a large leader in the reasons their are such big wealth divides in nations such as the United States where in 2015 the top 1% of earners had more wealth but the other 99% combined.

Foreign Subsidiaries:

Many firms may have one of their companies based in their country of operations, however they will typically have…


Enron was an American energy and commodity based in Texas. For its in lifetime in the later 20th century and early 21st century, it witnessed massive growth year on year and had reached an all time high of $90.75 however this changed in the crisis around Enron leading to the stock price plummeting almost overnight to under a dollar and soon later the firm was filing for bankruptcy. It was revealed that they had been concealing their debt and loans under SPV taking advantage of the mark for marketing(MFM) accounting technique which allowed them to log deceivingly large growth in…


To understand what is irrationality it is better to understand what rationality is: rationality is the idea that our choices are made based on what brings us the most utility and benefit. Although, we may think we instinctively do this, we all have probably got thoughts in our head from when we have made a decision we regret and this is a source of irrationality which is what we are going to discuss. The main reasons for irrational thinking is:

  • Imperfect Information
  • Time-Pressure
  • Computational Weakness

Imperfect information is where the person isn’t fully aware of the decision’s outcome before they…


Surplus is defined as the extra benefit to society that a given good’s price gives to society. This can be split into producer and consumer surplus where producer surplus would be the extra profit they generate per good from a certain price level whilst consumer surplus is the utility provided by a product for its price level.

Consumer Surplus:

The demand curve shows the value a consumer finds a good at a given price level meaning that above equilibrium, there are consumers who value the product higher than its market price. …


The price mechanism is how we exchange goods and services in the modern world. Originally, we used the barter system which was a system of trade, however this relied on the people owning something of value for each other which couldn’t be guaranteed so money provided as that medium of exchange between the barter system creating the price mechanism. The price mechanism involves using the invisible hand of market forces to shift a product along the supply curve until it is at equilibrium. …


In Economics and in basic business, we need to understand how supply works so a firm can operate at optimal levels of production.

The supply curve is typically displayed as shown as it is usually used in accordance with the demand curve. What is suggests is that as the price of a good increases, the firm is likely to increase its supply of it and this is known as the law of supply. The reason the price increase will cause increases in supply is because the product is going to produce more profit since its margins are higher. …

PasiduPerera

Prospective Economics Student

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