# All Questions

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### Equilibrium asset prices of a risk-free bond and a stock

Setup: Two-period economy with two equally likely states of the world in the second period. Two consumers with Bernoulli utility and same discount factor
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### Auction with independent private values - An example from Game Theory: Analysis of Conflict by Roger Myerson

I have difficulties understanding the equilibrium analysis of the following auction game: Suppose that there are $n$ bidders in an auction for a single indivisible object. Each player knows privately ...
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### General mechanism of bond price and real interest rate movements

Jeremy Siegel writes in "Stocks for the long run" that when better than expected economic data is released bond prices fall and real interest rates go up. Why do bond prices fall with ...
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### What does it mean for a country to use another country's currency?

Argentina's new President-elect is proposing replacing the peso with the US dollar as the country's currency. What exactly does it mean for country A to adopt country B's currency? And how does it ...
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### Why do firms produce less than what is socially optimal in an imperfect competition?

I just read an introduction to imperfect competition in my AP microeconomics textbook and one of the practice questions asked about production in imperfect competition. The answer choices were ...
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### "If the aggregate supply is linear, demand shocks cannot affect average unemployment", what does it mean?

Aggregate Supply: $\pi_t =\pi_{t-1} -\alpha(u_t -\bar{u})+e_t^S$ Welfare: $W_t =-cu_t -f(\pi_t ), c>0, f''(\cdot)>0$ $\bar{u}$: natural unemployment rate $e_t^S$: supply shock In Romer's ...
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### Define "Equilibrium" in Market Design task

in a current market design problem set I am very confused by the given questions. We are often asked to find "an equilibirum of the [auction type, e.g. second-price auction]". The amount of ...
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### Does anybody know why the Fed Funds Effective Rate has 3 evenly spaced dips in between every FOMC meeting, that suddenly stop on March 21st 2018?

In general the effective rate was much more volatile the further back you go, but now it is perfectly straight, what has changed? The fact that it is exactly three evenly spaced dips of 8-10 basis ...
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### Taylor Rule Model Specification: Serial Correlation and Interest Rate Smoothing

I'm reading this paper by Abrams and Iossifov. The paper investigates electoral cycles influence on monetary policy by estimating a Taylor Rule reaction function using OLS. The authors describe the ...
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### Can anyone pls do the derivation of the cournot aggregation condition and make it explanatory

I'd like to know how the aggregation condition was derived.
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### Understanding consumption units normalisation by $u^\prime (c)$

It is frequently noted that if utility is given by $u(c)$, then the object $$\frac{u(c)}{u^\prime (c)}$$ puts the utility in consumption units via the normalisation by $u^\prime(c)$. What is the ...
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### How could a market be designed to prevent hoarding?

Imagine that someone has been put in charge of creating a new market for some kind of commodity. They have ultimate regulatory power. What kind of market mechanisms could they put in place to ...
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### How to compare Preferences in Utility Functions?

When looking at utility functions, how do you compare preferences? I understand the economic concepts, but the math part is holding me down from understanding a lot in the textbook. (I am not typing ...
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### Calculating Effective Maturity with Negative Cash Flows

The formula for effective maturity. Suppose that an installment plan also shows additional borrowings of a debtor. That is, at some point in time (other than the inception date) the borrower is given ...
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### Derive differen function of production

Find the optimal cost function, profit function, and input functions of the following supply functions: a. 𝑓(𝑙, 𝑘) = 4𝑙½k½ b. 𝑓(a,b)= (a^½+3b½)^2
1 vote
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### The consideration of export in calculating national income

Is export/imports a part of factor income i.e returns from the act of production? If not, then here is my counter argument. Export is the equivalent value which is added to the goods when it is ...
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### Microeconomics to show if indifference curve is convex to the original [closed]

) for the following utility functions and determine whether they have convex indifference curves i. 𝑈(𝑥, 𝑦) = 3𝑥 + 𝑦 5 marks ii. 𝑈(𝑥, 𝑦) = √𝑥 ∗ 𝑦 5 marks iii. 𝑈(𝑥, 𝑦) = 𝑥𝑦 𝑥+�
1 vote
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### Why Is Having a Strong Manufacturing Base Important to a Country's Economy?

I was living in Pittsburgh in my teens and twenties during the collapse of the steel industry and remember how profoundly it impacted Pittsburgh. Some say that due to the large percentage of the ...
1 vote
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### MR Diagrams touching y axis

The following is from an exam question: To my mind this is plain nonsense. If Q is zero, AR and MR are zero, not some point above P1. My question: is there any significance in drawing this diagram ...
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### Using Variance for Nash Equilibrium

For the mixed strategies, the expected utility (or payoff) is used to find the mixed strategy Nash Equilibrium. The main assumption is players try to maximize their expected payoffs. However, I think ...
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### What are the ways to take account of inflation?

If one wants to analyze the influence of inflation on other macro economic indicators, what are the best/standard way of how to use it? I've found 3 variants: As is (yearly values). To take ...
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### Deflated Consumption Data

I have been researching the literature of consumption inequality for my project. Most of the articles have deflated the consumption datasets, before measuring the inequalities with different indices. ...