All Questions
Tagged with macroeconomics supply-and-demand
60 questions
3
votes
0
answers
29
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Economic trade-offs of rooftop solar
It’s a well known problem that rooftop solar drives up electricity prices for non-rooftop solar consumers. This has resulted in some advocates favoring utility scale solar.
Just today the Washington ...
- 131
0
votes
0
answers
30
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in demand curve tax on buyer shouldnt it be movement along the graph?
if buyer has the burden of tax it shift the demand curve but tax comes under(according to me) in Price of the good so shouldnt it be movement along the graph
this is the reasoning in my reading for ...
0
votes
1
answer
103
views
Is John Maynard Keynes an economic liberal or an economic nationalist?
I am working on a research project about political economy. However, I stumbled upon differences in the interpretation of the orientation of John Maynard Keynes. Some sources indicate that Keynes is a ...
1
vote
1
answer
40
views
Modelling the inefficiency of redistribution in case of proportional taxation and lump-sum subsidy
I would like to model the following situation in the simplest possible way.
First, a government imposes a proportional tax on the whole population, say, x% of income for each household.
But then, it ...
- 13
0
votes
0
answers
129
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Suppliers holding back production in expectation of better price in future
Anthony’s Ephemera Emporium sells signed photos of cryptids like Bigfoot, chupacabra, and other mythical creatures. These photos are substitutes in production.
If Anthony expects the price of signed ...
- 225
1
vote
1
answer
68
views
Why do central banks want to decrease inflation?
Inflation is a result of increased demand with same supply (in worst case. in best case, supply also increases), due to more money on people's hand. As far as I understand it, inflated market is still ...
- 11
2
votes
1
answer
89
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How to measure supply constraints/bottlenecks
A common explanation for the recent global surge in inflation points to supply constraints and bottlenecks in delivery chains. While I find the argument appealing, I have seen little quantitative ...
- 123
1
vote
1
answer
421
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Chain effects when Money Demand is greater than Money Supply
Here is an example graph of Money Market Equilibrium
The chain effects when interest rate is 8% are :
Excess Demand for Money => So, People would sell Bonds => Bond Prices goes Down => ...
1
vote
0
answers
19
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Why don't both Supply and Demand Curve Shift in Loanable Funds Market in Case of Gov't Deficit/Surplus?
Here it is written:
But that doesn’t mean both curves shift? Supply and demand do not have the same determinants in any market. Your graphical model should reflect only one point of view.
I don't ...
- 225
0
votes
1
answer
142
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Why doesn't demand affect output in the long run?
In Mankiw's Macroeconomics, he states that, in the short run, an economy's output depends both on its supply and demand for goods and services, because of price stickiness. In the long run, when ...
- 15
0
votes
1
answer
549
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Why is the horizontal axis 'Real GDP' in Aggregate Demand Curve
In the aggregate demand curve, the horizontal axis is labelled 'Real GDP'.
Why doesn't it represent 'Quantity Demanded'? After all the curve is the aggregate demand curve, so we have to show some ...
- 225
0
votes
1
answer
222
views
A new study finds that eating apples improves health. Will this shift the supply curve?
Suppose that a new study finds that eating apples helps improve health. Will this change supply curve?
I think yes. Increase in demand of apples causes more apple producers to spring up. This will ...
- 225
0
votes
3
answers
982
views
What causes inflation?
Given the recent increases in the price of many things in the US (lumber, used cars, gasoline, etc…) I have begun thinking about what is going on at a macroeconomic level. My first thought is “it’s ...
- 191
0
votes
1
answer
35
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Why do firms reduce both price and supply during a recession?
Could anyone explain why firms reduce both price and supply of goods and services during a recession with a practical real life example for better understanding ?
- 1
1
vote
1
answer
686
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Classical Theory of Inflation - Money Supply, Money Demand and Prices
In every textbook, website I read when talking about the classical theory of inflation, I see the diagram below which depicts the value of money, prices etc. This one below is from Spark notes (https:...
- 405
0
votes
1
answer
47
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LM-Curve formula question
An LM Curve can be described as following
$M^d(Y,i) = M_0 + M_1Y – M_2i$
$M^d = M/P$
M and P are exogen
I know that $i$ is interest rate, and Y is GDP.
Why is $M_1$ and $M_2$ positive? And what does $...
- 105
0
votes
1
answer
101
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Derive IS-Curve (Y)
An Economy has a GDP described by the following:
$Z=C(Y −T)+G+I(r)$
$C(Y −T)=C_0 +C_1(Y −T)$
$I(r) = I_0 − I_1r$
where Z is planned expenditure, Y is GDP, T is tax, G is public consumption, I is ...
- 105
2
votes
1
answer
174
views
LM curve from money demand
Let $M^d (Y,r)=a+bY-cr$ where $M^d = M/P$ is the money demand in the economy. $a,b,c>0$. Derive $LM$.
My try
$M/P=a + b Y - c r$
$b Y = -a + \frac{M}{P} + c r$
$Y = -\frac{a}{b} + \frac{M}{b P} + \...
user31331
0
votes
1
answer
9k
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Calculate supply function based on production or cost function
Q1: A company has the following production function:
$$f(x_1,x_2) = 2x_1 + x_2$$.
The factor prices are $w_1=4$ and $w_2=3$. Calculate the company's supply function.
Q2: A company's cost function is
$$...
- 13
1
vote
2
answers
146
views
Question about the Law of Supply
I have a contention with the Law of Supply's dictum "if the price of a good falls, then the quantity supplied of that good falls, ceteris paribus."
Imagine a market for widgets produced by ...
- 111
1
vote
0
answers
49
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How would a global Robin Hood deed affect the economy? [closed]
In one fiction series about a dystopian world, a small group of wealthy criminals owned a large fraction of the world's cash, which was on their bank accounts in a single offshore bank. In the happy ...
- 119
0
votes
1
answer
242
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Increased production costs associated with increased output produced? Why do firms have prices increase with the SRAS or Supply Curve?
In my textbook, it said (this is for SRAS and AD, but I'm also going to apply this a bit fo microeconomics.. sorry for mixing, but my question applies in both ways, I believe) "The average price ...
user27846
1
vote
1
answer
97
views
What is supply-side of economics?
I've got a question for economics that I need help with, here is the question:
"What is meant by the supply side of economics? Define the term ‘supply’ in the context of economics and explain the ...
- 23
1
vote
2
answers
57
views
Industries that thrive in crisis like COVID 19
I am aware that some industries thrive during crisis times like COVID 19...Food supplies, medical, counselling, funeral services, liquor etc.
Are there any other industries that may do well during ...
0
votes
2
answers
84
views
“Consumption lowers investment” mankiw explanation
I am teaching myself macroeconomics and I am stuck on this reading Mankiw:
Because the economy’s output is fixed by the factors of production and
the level of government purchases is fixed by the ...
- 103
1
vote
0
answers
37
views
Considering existence of firms with sticky prices of goods, why are we sure that SRAS will be upward slopping?
One of theories that explains why the SRAS is upward slopping is the theory of sticky prices.
For an example, suppose there is inflation. In the short run it will take different time for firms to ...
- 1,135
0
votes
1
answer
164
views
How will economy find long-term equilibrium in AD-AS model in case of a negative supply shock?
Let's suppose that negative supply shock happened that affected SRAS, but not LRAS. Let's also assume that previously there was long-run equilibrium at point $A$. Due to negative supply shock SRAS ...
- 1,135
0
votes
1
answer
49
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Market impact function
I have the following Dynamical system for market impact function
$$p_{t+1}-p_t=a(d_t-s_t)$$
$$s_{t+1}-s_t=bp_ts_t-cs_t$$
$$d_t=y-rp_t$$
where $s_t$ is quantity supplied, $d_t$ is quantity demanded, ...
- 192
0
votes
2
answers
90
views
elasticity of income if price changes by 10 percent
Arista always spends 10
% of her income on whatzits. Assume that her income increases by some percentage while the price of whatzits remains constant (and that all whatzits cost the same). What is ...
user24599
1
vote
0
answers
36
views
Profits and Aggregate Supply
I feel like this is quite a stupid question, but I can't wrap my head around it. Why do suppliers make less of a good as profits drop? Intuitively, shouldn't they make more of the good in order to ...
- 113
1
vote
3
answers
571
views
The law of supply and demand - How does it work?
I've learned what the principle of supply and demand says, and would paraphrase it like this:
The price of a good is at equilibrium when supply and demand are
equal.
Or with other words:
The price ...
2
votes
1
answer
156
views
Predicting Shifts in Supply and Demand for Loanable Funds
I know the answer is A. but I need an explanation on why. I thought government savings would decrease since they have less tax revenue, shifting savings left and interest rates up. I could see how ...
- 33
2
votes
1
answer
177
views
Question on shifts in Supply and Demand Curves
I have a super basic question on the shift in supply and demand curves ( I haven't seen this stuff since high school). More generally, this is about solving systems of simultaneous equations.
We have ...
- 1,633
2
votes
1
answer
509
views
Why slope is constant in demand/supply curve?
I was reading Mankiw and it showed variation of demand/supply curve with external factors. However, in all the cases the curves only shifted but didn't change in shape. What I am wondering is why the ...
- 123
0
votes
1
answer
6k
views
Short run Aggregate supply curve is horizontal or positively sloped?
I want to understand the adjustment process from Very short run production decision to Short run production decision to Long run production decision. As far as I've understood: consider an increase in ...
- 249
0
votes
3
answers
55
views
Will periodical increasing and decreasing cryptocurrency supply peg cryptocurrency to dollar effectivelly?
As far as I understand, in order to make cryptocurrency pegged to USD we need somebody to take the risks of exchange rates. So, if ratio CRYPTO to USD is at a given time 1CRYPTO:1,1 USD, then we ...
2
votes
1
answer
135
views
Effect of money supply on price level
Consider a macroeconomy defined by following equations:
$$M = kPy + L(r)$$
$$S(r) = I(r)$$
$$y = m $$
Where $M$ is money supply, $P$ is price level, $y$ is output, $r$ is interest rate, while $k,m$ ...
- 21
2
votes
1
answer
5k
views
Recession and Net Export
When a country's economy is currently in recession (or has entered a recession), will the net export increase or decrease? What will happen to the major trade partner's net export (will it be the ...
- 41
4
votes
2
answers
374
views
JK Galbraith Quote: How to interpret?
I came across a very thought-provoking quote by JK Galbraith concerning supply-side economics. The quote is as follows:
The poor don't work because they have too much money. The rich don't
work ...
- 1,101
1
vote
0
answers
45
views
How change in technology affects the price of labour and capital?
If the technology improves how does the price of labour and capital change. We take the neo-classical assumption that demand for each factor depends on it's marginal productivity, and demand and ...
1
vote
0
answers
2k
views
How price and quantity of ice cream sold changes when the price of yogurt reduces?
I am a newbie at economics and would appreciate help from the community.
Question
Use the model of supply and demand to explain
how a fall in the price of frozen yogurt would
affect the price of ...
1
vote
0
answers
87
views
How can I model immigration and xenophobia economically using these equations?
I'm trying to put together a toy model for immigration ($I$), labor prices ($w$), and a measure of xenophobic/nationalistic sentiment ($A$). What I've come up with so far is the following:
$$\frac{dI}...
- 11
3
votes
0
answers
51
views
What would be the consequences of universal parity of buying power (wage value) and freedom to buy?
I've wondered about this for many, many, years..... maybe there's an answer (or several answers?) after all.
As the global economy is set up, one reason a person in the US and EU can afford a nice ...
- 131
0
votes
1
answer
71
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If I want to create my own currency model what would be the best basic options / things / ideas I need to look into? [closed]
First of all, I am from a IT background and currently writing my thesis on a system in which I am have to create a model of a nation. So to run the economy in this simulation (for now you can ...
- 109
3
votes
2
answers
4k
views
Supply/Demand Curve for Excise tax that's being passed 100% on to consumers
I'm doing a paper on the 'coca-cola tax' the tax on all sugary drinks. The premise is that it is an excise tax, which will then be passed 100% on to consumers. What I'm struggling with is how the ...
- 31
1
vote
1
answer
32
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What would be the practicality of a widespread open-source approach in an economy?
I'm not sure how to tag this so feel free to add any tags you see as relevant.
The question here is about anything that uses a proprietary approach today and applying open-sourcing to it.
What if ...
- 111
2
votes
2
answers
4k
views
What is the difference between aggregate supply and GDP?
Usually when I read online, I see the following repeated frequently: aggregate demand is equal to GDP. I understand that aggregate expenditures is the aggregate demand at a particular price level, and ...
- 175
0
votes
1
answer
94
views
Textbook claims that price level accompanied by decrease in interest rates?
I read from this textbook the following, quoted as:
In addition, a decline in the price level is usually accompanied by a
fall in the rate of interest...
I interpret this as meaning: "A fall in ...
- 675
0
votes
2
answers
224
views
How do we prevent big companies conspiracy?
These days we can see a bunch of troubling trends.
Consumer goods are less quality.
Big companies merge.
Patent laws and strict requirements on appearance remove small entrepreneurs from the ...
- 165
2
votes
1
answer
201
views
Why is GDP growth so important that central banks are trying to impose negative interest rate?
BoJ just announced its negative interest rate policy in an effort to drag Japanese out of a deflationary mindset and hoping to shift the demand curve to boost the economy. However, my question is, if ...
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