AED0633

INTRODUCTION TO ECONOMICS FOR BUILT ENVIRONMENT

SEMESTER 3, SESSION 2021/2022

ASSIGNMENT 2

Topics:
Study of the microeconomics of Sweden and United Kingdom

Prepared by:
Matric No. Name
212964 Muhammad Shamil Asyraf Bin Muhamad Sabri
213025 Muhammad Taufiq Bin Abdul Mutalib

1
TABLE OF CONTENTS

COUNTRY: SWEDEN
1.0 INTRODUCTION
1.1 Backgrounds
2.0 MARKET STRUCTURE
2.1 Perfect Competition
2.2 Monopolistic Competition
2.3 Oligopoly
2.4 Monopoly
3.0 CURRENCY
4.0 CENTRAL BANK
5.0 GROSS DOMESTIC PRODUCTS (GDP)
6.0 INCOME AND EXPENDITURE

COUNTRY: UNITED KINGDOM

1.0 INTRODUCTION
1.1 Backgrounds
2.0 MARKET STRUCTURE
2.1 Perfect Competition
2.2 Monopolistic Competition
2.3 Oligopoly
2.4 Monopoly
3.0 CURRENCY
4.0 CENTRAL BANK
5.0 GROSS DOMESTIC PRODUCTS (GDP)
6.0 INCOME AND EXPENDITURE

2
COUNTRY: SWEDEN

1.0 INTRODUCTION
1.1 Backgrounds

Northern Europe's Scandinavian Peninsula is home to the nation of Sweden.

The word Svear or Suiones, which was cited by a Roman author by the name of
Tacitus in early 93 CE, is the source of the name Sweden. Svithoid is another name
for the nation that was once used. Stockholm serves as the nation of Sweden's capital
and has done so since 1523.

Sweden settled a great part of the Scandinavian Peninsula and shared its
border with the country of Norway. From the tall mountains near the Norwegian
border eastward to the Baltic Sea, the ground gently declines.

2.0 MARKET STRUCTURES

2.1 Perfect Competition
The example of perfect competition in Sweden is agricultural product. In south of
Sweden, the agricultural products are dominatted by wheat, barley, sugar beets,
oilseeds, patato and stapled vegetables whereas in the northern part of the country,
most product is potato.

2.2 Monopolistic Competition

Food industry in Sweden can be considered as one of trhe example of this type of
market structure. Restaurant and retail store also can be included.

3
 2.3 Oligopoly

The banking industry in Sweden is one of the few areas where oligopoly exists.
Four sizable banks—NDA, SHDA, SEBA, and SWEDA—control the majority of the
Swedish banking market. Due to the industry's enormous concentration,
interconnection, and banking above the crisis in 1990, these banks are required to
maintain some of the highest regulatory capital levels in the world. The Swedish
property market is one that the banks there are very exposed to.

2.4 Monopoly
The example of monopoly market in Sweden is the monopoly of alcoholic
beverages.

3.0 CURRENCY

The official currency used in Sweden is Krona or Swedish Krona. Despite being
one of the members of the European Union (EU), Sweden does not bother to use the
euro as their currency. In 2003, Sweden made a referendum and they decided that
Swedes will not adopt the single currency to be used in their country.

This means that if a traveller travels around the EU region, they need to exchange
the euro currency to Swedish Krona when visited. The Swedish crown is usually
referred to as SEK or Kr.

The Swedish bank notes have the following denominations: 20, 50, 100, 200, 1000.

4
4.0 CENTRAL BANK

4.1 Background

Sveriges riksbank, or simply known as Riksbank is the central bank of Sweden. It

is the oldest central bank in the world and fourth oldest bank in operation. The
Riksbank began it operation since 1668. This bank is responsible for the monetary
policy of Sweden. According to the Riksbank Act, the bank shall "maintain price
stability". This act can be achieve by maintaining the inflation rate at low and stable
level.

4.2 Effects on Economies

In many countries, inflation has risen rapidly, owing in part to the pandemic's
aftermath in the form of disruptions in global supply chains and rising energy and
commodity prices. Russia's invasion of Ukraine, as well as Chinese lockdowns, have
contributed to a further rise in inflation. As a result, central banks worldwide have
begun to conduct less expansionary monetary policy, and interest rates have risen. It
is unclear how economic agents will deal with rising interest rates. Existing
vulnerabilities in Sweden have grown as the debts of property companies and
households have increased. Overall, the risks to financial stability have grown.

The large and growing lending by Swedish banks to commercial property

companies poses a significant risk. Furthermore, if credit conditions tighten and
economic activity weakens, the risk of large price drops on their properties rises,
which can have serious consequences for both property companies and lenders.

5
5.0 GROSS DOMESTIC PRODUCTS (GDP)

The Gross Domestic Products (GDP) of Sweden in 2021 was 627.44 billion USD.
The GDP growth of Sweden in 2021 is estimated around 4.8% from 2020. From 2012
untill 2015, the GDP experience positive growth while from 2016 and beyond, the
GDP growth has experience up and down. Roughly 3/5 Sweden's GDP passed
throught the public sector. Taxation is primarily used to cover the costs of education,
healthcare, and child care. However, over the final two decades of the 20th century,
government intervention in the distribution of national income reduced.

In 2011, the inflation rate in Sweden was 2.96% and making the highest inflation
rate for past 10 years. It decrease in 2012 to 0.89%. Sweden experience deflation for
three consecutive years which is in 2013, 2014 and 2015 withe the deflation rate of
-0.04%, -0.18% and -0.05% respectively. In 2016, the inflation rate become 0.98%
and it is good news for the Swedes economy. For 2017, the inflation rate was increase
by 0.81% and making it to be 1.79%. In 2018, the inflation rate rise to 1.95% and
decrease again next year to 1.78%. Meanwhile in 2020, the inflation rate is keep to
drop and become 0.50% by the end of the year. Sweden has the average inflation rate
of 1.058% annually and make its economy more stable because the optimum inflation
rate for a certain country is between 1%-3%.

6.0 INCOME AND EXPENDITURE

6.1 Income

With the support of iron ore, lumber, and hydropower, Sweden is a highly
developed export-oriented nation. The greatest source of income for the Swedish
government in 2020 came from direct labor taxes, which totaled over 670 billion

6
Swedish kronor (65 billion USD). Indirect taxes on labor accounted for the
second-highest income, totaling 602 billion Swedish kronor (58 billion USD).

The majority of Sweden's income comes from manufacturing, which is

export-oriented. A significant exporter of wood and lumber goods is Sweden. The
manufacturers, who are situated in Sweden, create a range of wooden goods, such as
paper, board, furniture, and prefabricated homes. Currently, the privately held
company generates nearly nine tenths of the nation's industrial production. The largest
manufacturing sector in Sweden, accounting for around half of all industrial value
added, is the automotive sector.

Early in the twenty-first century, Swedish automakers Volvo and Saab

maintained a solid international reputation. In 2011, Saab declared bankruptcy, but
National Electric Vehicle Sweden ended up buying the majority of the company's
assets.

6.2 Expenditure

The type of expenditure that cost the Swedish government the most in 2021 was
social protection. Around 376 billion Swedish kronor ( 36.3 billion USD) were spent
by the government overall on social protection. Public administration came ranked
second in terms of funding from the Swedish government in 2021, behind the only
business and economic development. The federal government of Sweden spent more
than 1.1 trillion Swedish kronor (106.3 billion USD) during that year.

7
COUNTRY: UNITED KINGDOM

1.0 INTRODUCTION

1.1 Background
The United Kingdom of Great Britain and Northern Ireland, commonly known as
the United Kingdom (UK) or Britain, is a sovereign country in Europe, off the
north-western coast of the continental mainland. It comprises England, Wales,
Scotland, and Northern Ireland.

The United Kingdom is a unitary parliamentary democracy and constitutional

monarchy. The monarch, Queen Elizabeth II, has reigned since 1952. The capital and
largest city is London, a global city and financial centre with a metropolitan area
population of over 14 million.

2.0 MARKET STRUCTURE

2.1 Perfect Competition

The example of type of goods belongs to Perfect Competition in United Kingdom
are cereals, such as wheat, oats and barley and root vegetables, such as potatoes and
sugar beet.

2.2 Monopolistic Competition

8
 The example of type of goods belongs to Monopolistic Competition in United
Kingdom are restaurant business, hotel and pubs, general specialist and consumer
services such as hairdressing.

2.3 Oligopoly
The example of type of goods belongs to Oligopoly in United Kingdom are
supermarket industry. It's dominated by Tesco, the leading supermarket with the
highest market share, followed by ASDA, Sainsbury's, and Morrisons, which all make
up the 'big four'.

2.4 Monopoly
The example of type of goods belongs to Oligopoly in United Kingdom are
connected to the technology industry and have been termed as the 'big tech'
monopolies. The examples are Google, Apple, Facebook, Microsoft and Amazon.

3.0 CURRENCY

United Kingdom's national currency is the pound sterling (symbol: £), which is
sub-divided into 100 pence (symbol: p). The United Kingdom bank notes have the
following denominations: £50, £20, £10 and £5, and coins in: £2, £1, 50p, 20p, 10p,
5p, 2p and 1p.

Scotland and Northern Ireland issue their own pound sterling notes that represent
the same value as an English note - people can use English and Scottish (although the
Scottish £1 note is not accepted outside Scotland) money anywhere in the UK, but
Northern Irish cash can only be used in Northern Ireland. People can exchange them
for English notes in any bank, however.

9
4.0 CENTRAL BANK

4.1 Background
The Bank of England (BoE) is the central bank of the United Kingdom and a
model on which most central banks around the world are built. Since its inception in
1694, the bank has changed from being a private bank that loaned money to the
government, to being the official central bank of the United Kingdom. The bank
started during a period of economic turbulence when the national debt was growing at
a steady rate. The Bank of England became the official central bank of the UK in
1946. It is owned by the Treasury Solicitor, on behalf of the government. Previously,
it was the property of stockholders from its foundation.

4.2 Effects on economy

The Monetary Policy Committee (MPC), which consists of nine members, sets
interest rate policy. The MPC is led by the Governor of the Bank of England, a civil
service position typically held by a career bank employee. The committee includes the
three deputy governors for monetary policy, financial stability, and markets and
policy, as well as the Bank of England's chief economist. The Chancellor of the
Exchequer, who is equivalent to the Secretary of the Treasury in the United States,
appoints the final four members.

The MPC meets eight times a year to consider whether interest rate policy should
be changed to achieve the government's inflation target. Each committee member has
one vote, and there is no need for unanimous agreement. The Bank of England
controls the bank rate, which is the interest rate charged to domestic banks.

The bank rate was 5% when the global financial market crisis hit in October 2008.
It was reduced to 0.5 percent by March 2009, but the reductions had no effect on the
10
economy. Through the Asset Purchase Facility, the MPC provided additional stimulus,
a process known as quantitative easing (QE).

Following the 2008 global financial crisis, the government implemented new
regulatory reforms through the Financial Services Act of 2012. With these measures,
the bank established the Financial Policy Committee (an independent committee
modelled after the MPC) and the Prudential Regulation Authority, a new subsidiary of
the bank. In addition, the bank began to monitor financial market infrastructure
providers such as payment systems and central securities depositors.

5.0 GROSS DOMESTIC PRODUCTS (GDP)

United Kingdom's GDP for 10 years ago, which is 2012 is 2.704 trillion USD.
For 2013, it increases to 2.783 trillion USD. United Kingdom's GDP in the year 2014
is the higest in the past ten years which is 3.066 trillion USD. In the year 2015, it
decreases to 2.933 trillion USD. It still decreases in 2016 to 2.693 trillion USD and
2017 it decreases to 2.662 trillion USD. In the year 2018, the GDP increases to 2.857
trillion USD then decreases back to 2. 831 trillion USD in 2019. In 2020, the GDP
still decreasing to 2.708 trillion USD.

United Kingdom's inflation rate for 2012 was 2.57 %, it is an optimum inflation
rate. It decreases 0.28 percent in the year 2013, make the inflation rate in the year
2013 was 2.29, but still in optimum inflation rate. The inflation rate decreases again in
the year 2014 for 0.84% make it 1.45% inflation rate for that year. As the inflation
rate is above 1% it is still in the optimum inflation rate. The inflation rate in United
Kingdom themn decreases to 0.37 in the year 2015, make it out from an optimum
inflation rate. The inflation rate increases back in the year 2016 make it optimum back
for 1.01% inflation rate. For the next year,2017, it is still increasing to 2.56, but keep
in the optimum rate. It later decreases to 2.29% in the year 2018, and decreases to

11
1.74% in 2019. In the 2019, drop to 0.99% make the inflation rate out from the
optimum rate.

6.0 INCOME AND EXPENDITURE

6.1 Income
With a gross domestic product (GDP) of $2.83 trillion in 2019 and a population
of more than 66 million, the United Kingdom has the sixth-largest economy after the
U.S., China, Japan, Germany, and India.

England, Scotland, Wales, and Northern Ireland make up the United Kingdom. Its
economy is extremely varied, and its quality of life is widely regarded as being high.
Services, manufacturing, construction, and tourism are the industries that make up the
lion's share of the U.K.'s GDP. Its laws are distinctive, such as the free asset ratio.

The services sector is the largest in the U.K., making up more than three-quarters
of the GDP, according to the U.K. Office for National Statistics (ONS). Finance and
business services, consumer-oriented industries like retail, food and beverage, and
entertainment are just a few of the many industries that make up the service sector in
the UK. Agriculture accounts for roughly 0.60 percent of the GDP, while
manufacturing and output make up less than 21%.

6.2 Expenditure
According to statistics, more than 28.68% of their expenditure is used for social
protection. 21.84% of expenditure is used for health and 11.78% is used for education.
For the other sectors, 6.65% is for industry, agriculture and employment, 5.70% is for
defense, 4.84% is for transport, 4.27% for debt interest, 3.89% for publicorder and
safety, 3.80% for personal social services, 3.13% is for housimg amd environment
and 5.41% for others including EU transaction.

12
CONCLUSION

Both of the country has their own pros and cons of their respective economic.
Based on the study conducted, it seems like the United Kingdom has the upper hand
on the Gross Domestic Products (GDP).

13
Reference:

Retreved from
https://www.studysmarter.us/explanations/economics/microeconomics/monopolies-in-
the-uk/
Retreved from
https://www.studysmarter.co.uk/explanations/economics/microeconomics/uk-superma
rket-oligopoly/#:~:text=As%20we%20said%2C%20the%20UK,up%20the%20'big%2
0four'.
Retreved from
https://www.economicsonline.co.uk/business_economics/monopolistic_competition.ht
ml/
Retreved from https://www.visitbritain.com/ae/en/plan-your-trip/money/currency-uk#
Retreved from
https://corporatefinanceinstitute.com/resources/knowledge/economics/what-is-bank-o
f-england-boe/
Retrieved from
https://www.investopedia.com/terms/b/boe.asp#:~:text=The%20Bank%20of%20Engl
and%20(BoE)%20is%20the%20central%20bank%20for,most%20importantly%2C%
20oversees%20monetary%20policy.
Retreved from
https://www.macrotrends.net/countries/GBR/united-kingdom/inflation-rate-cpi
Retrieved from
https://www.investopedia.com/articles/investing/042915/how-uk-makes-money.asp#:~:
text=The%20sectors%20that%20contribute%20most,manufacturing%2C%20constru
ction%2C%20and%20tourism.
14
https://www.statista.com/statistics/914287/central-government-income-in-sweden-by-t
ype/#statisticContainer

15