Economics. Dr. Pass Christopher

      If the authorities can get the timing and magnitudes correct, then they should be able to counterbalance the effects of recession/depression and follow the path indicated as dotted line 2 in Fig. 41. Reducing the intensity of the recession in this way requires the authorities to FORECAST accurately the onset of recession some time demand management ahead, perhaps while the economy is still buoyant (time period 6). On the basis of these forecasts, the authorities can then plan their intervention to stimulate the economy (time period 7), activate these measures (time period 8), so that these measures begin to take effect and stimulate the economy as economic activity levels fall (time period 9).

      Much government action is inaccurate in timing because of the institutional and behavioural complexities of the economy. Where the government has not been successful in adequately eradicating such peaks and troughs in the business cycle, it is frequently accused of having stop-go policies (see STOP-GO CYCLE), that is, of making injections into a recovering economy, which then ‘overheats’, and subsequently withdrawing too much at the wrong time, ‘braking’ too hard.

      Demand management represents one facet of government macroeconomic policy, other important considerations being SUPPLY-SIDE policies, which affect the rate of growth of potential GNP, and EXCHANGE RATE policies, which affect the competitiveness of internationally traded goods and services. See DEFLATIONARY GAP, INFLATIONARY GAP, EQUILIBRIUM LEVEL OF NATIONAL INCOME, AUTOMATIC (BUILT-IN) STABILIZERS, INTERNAL-EXTERNAL BALANCE MODEL, PUBLIC FINANCE, BUDGET.

      Fig. 41 Demand management. The management of aggregate demand in an economy.

      demand-pull inflation a general increase in prices caused by a level of AGGREGATE DEMAND in excess of the supply potential of the economy. At full employment levels of output (POTENTIAL GROSS NATIONAL PRODUCT), excess demand bids up the price of a fixed real output (see INFLATIONARY GAP). According to MONETARISM, excess demand results from too rapid an increase in the MONEY SUPPLY. See INFLATION, QUANTITY THEORY OF MONEY, COST-PUSH INFLATION.

      demand schedule a table listing various prices of a product and the specific quantities demanded at each of these prices. The information provided by a demand schedule can be used to construct a DEMAND CURVE showing the price-quantity demanded relationship in graphical form.

      demand theory see THEORY OF DEMAND.

      demerger the break-up of a company, often originally formed through a MERGER, into two (or more) separate companies. This is most easily achieved when the original businesses comprising the merger have continued to be run as separate divisions of the enlarged group. In this case, for example, the A-B company could be split into separate quoted companies, A and B, with the company’s existing shareholders being given shares in both companies. Thus, unlike a DIVESTMENT (the sale of a division to outside interests) or a MANAGEMENT BUY-OUT (the sale of a division to its existing management), initially at least the companies continue to be owned by their existing shareholders.

      A demerger may occur because the merged company has failed to perform up to expectations because of internal conflicts of management, or may result from a rethink of the company’s BUSINESS STRATEGY favouring a concentration on ‘core’ businesses.

      Fig. 42 Demographic transition. The levelling-off of the rate of population growth during a country’s economic development.

      demographic transition a POPULATION cycle that is associated with the ECONOMIC DEVELOPMENT of a country. In underdeveloped countries (i.e. subsistence agrarian economics), BIRTH RATES and DEATH RATES are both high, so there is very little change in the overall size of the population. With economic development (i.e. INDUSTRIALIZATION), INCOME PER HEAD begins to rise and there is a fall in the DEATH RATE (through better nutrition, sanitation, medical care, etc.), which brings about a period of rapid population growth. Provided ECONOMIC GROWTH is consistently greater than the increase in population, income per head continues to expand and eventually serves to reduce the BIRTH RATE (small families become the ‘norm’ in society as people seek to preserve their growing affluence). At this point, population growth slows down and may eventually level off. See Fig. 42.

      Most advanced industrial countries have gone through a demographic transition of the kind described above and are today characterized by both low birth and death rates and slow-growing populations. See POPULATION TRAP, DEVELOPING COUNTRY.

      denationalization see PRIVATIZATION.

      demography the study of human POPULATIONS, including their total size, population changes over time as determined by changes in BIRTH RATES, DEATH RATES and MIGRATION; the age and sex distribution of populations and their geographical and occupational distributions. Statistical data on populations is compiled from CENSUSES of population and records of births, See DEMOGRAPHIC TRANSITION.

      Department for Education and Skills (DfES) the UK government department responsible for administering the government’s general educational programmes, including schools, colleges and universities, and vocational training schemes. The Department for Education and Skills replaced part of the former Department for Education and Employment in 2001. The emphasis in education is one of providing young people with a basic general education through schools, followed by further education opportunities at colleges and universities, with a commitment thereafter to ‘lifetime learning’ so as to equip people with the necessary basic and vocational skills to be able to adapt to the changing needs of the workplace. This is augmented by more specialized vocational schemes to match up people’s educational capabilities with the practical requirements of specific work tasks through ‘on-the-job-training’ (see TRAINING) and the provision of courses designed to teach people new skills (e.g. computer programming courses). See LEARNING AND SKILLS COUNCIL.

      Department for International Development (DFID) the UK government department responsible for administering the government’s policies of promoting sustainable development and reducing poverty in DEVELOPING COUNTRIES. The DFID itself provides ECONOMIC AID and works with various multilateral institutions such as the WORLD BANK and the United Nations to provide financial and technical aid to poor countries.

      Department for the Environment, Food and Rural Affairs (DEFRA) the UK body responsible for government policies on agriculture, horticulture, fisheries and the food chain; POLLUTION issues relating to waste and recycling; the enhancement and protection of the countryside, waterways and flood defence, hunting, and rural development issues. See ENVIRONMENT AGENCY.

      Department for Transport the UK government department responsible for administering government policies relating to the roads, railways, aviation and shipping.

      Department for Work and Pensions (DWP) the UK government department responsible for administering the government’s employment and social security programmes. The DWP was formed in 2001 from parts of the former Department of Social Security and Department for Education and Employment and the Employment Service.

      The department assists UNEMPLOYED people of working age into employment, helps employers to fill VACANCIES and provides financial support to persons unable to help themselves through ‘back-to-work’ programmes.

      The DWP also administers the SOCIAL SECURITY BENEFITS system, paying state pensions, sickness benefit, child support and the JOBSEEKERS ALLOWANCE.

      In 2002 the former Benefits Agency and the Employment Service were replaced by the JOBCENTRE PLUS network (responsible for helping people to find jobs and paying benefits to people of working age) and the Pension Service (responsible for paying state pensions).

      Regarding employment, a particular concern of the Department is to instil in people a culture of employment as being the norm but at the same time playing down the negative aspects of unemployment.