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Inflation (RPI) - another imperative channel. Oil is a necessity for the UK, and is price inelastic therefore one can analyse the correlation between a price shock and inflation. It is to be expected that an increase in the price of oil would lead to increased inflation, which would then impose pressures onto GDP. Thus it is of vital importance to observe the relationship between oil and inflation. The data is given as the quarterly rate of change from the previous 12 months.
The circular flow of income in an open economy An open economy is one in which international trade exists. Assume also that there is government spending and taxation. Thus
As previously stated, the aim of the paper is to observe and analyse the effects of oil price shocks on key macroeconomic indicators in the UK economy. From this the aim is to conc
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