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Questions tagged [macroeconomics]

Macroeconomics is a branch of economics dealing with the aggregate economy as a whole, rather than individual markets.

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Is there any relationship between Balance of Payments and GDP growth?

Consider a nation fuelling its GDP growth by catering to the domestic demand of some "new" goods and services which weren't being imported anyway. Clearly this will lead to growth in its GDP. However ...
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Logically inconsistent optimality condition

I'm reading a book on monetary policy, and it defines the representative household's consumption as $$C_t = \int_0^1 C_t(i) di$$ so, basically a sum over the consumption of good $i$. Then later on, ...
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What will be effects of normal inferior and giffen goods on consumer equilibrium? [on hold]

What will be effects of normal inferior and giffen goods on consumer equilibriums? Tell me in detail.
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What would be the value of weaponising emotional contagion as a form of crowd control in the digital public sphere - for example, Facebook? [on hold]

A few years ago an almighty fuss was kicked up by the revelation that Facebook had deliberately experimented with emotional contagion. Facebook apologised an nothing more was said about it. Still, ...
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Has Facebook considered a system of micro payments to pay users for the work they do in improving their Facebook?

Facebook, notoriously, crowd-sources through the internet to improve their product - Facebook. This without any payment. Given the vast computing power that is now available and the kind of personal ...
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Is Facebooks business model a form of neo-feudalism? [on hold]

In feudalism peasants, who were either villeins or serfs, were obliged to live on their Lords land and were to offer nobles labour, homage and a share of their produce in exchange for military ...
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Bond prices and Trade deficit

Why does the narrowing of trade deficit cause an increase in bond prices? I do understand that narrowing of trade deficit leads to narrowing of capital account surplus. Also, investor confidence ...
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What is the financial contribution to the USA economy by illegal immigration - decade by decade - since slavery was abolished?

The following question was closed down by the 'community' policing 'algorithm' after two down-votes, so I'm asking it again with a bit more detail: After the end of slavery in the USA - paid for by ...
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1answer
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What data/factors/attributes do the professionals monitor in a top-down analysis on the macroeconomics?

I am learning to do top-down analysis on a number of sectors in the US equity markets. I have never done it before and I would appreciate it if some professionals can share their experiences with me. ...
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1answer
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Isn't it the case that figures on employment should equal the sum of employees plus the self-employed?

This is a question about data consistency. I'm using the AMECO database and I'm interested in employment data for Greece. My current understanding is that the series about Employment (NETD) should ...
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Where does the Gini Coefficient Spreadsheet Computation on Wikipedia come from?

on Wikipedia there is a page called income inequality metrics and there is a table that explains how to compute a few, for example the well-known Gini Coefficient. Please find this approach under this ...
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What is the elasticity of the replacement between factors of production?

Following the work of Lu (1967) (Full text available here!) I got stuck trying to derive the elasticity of substitution between factors. He use the formula developed by Allen, that when the production ...
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Question about the Federal Reserve [on hold]

If the U.S Congress can make money for the people of the United States without a middle-man and charge 0% interest then what's the purpose of the federal reserve?
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Why are we using exp(.) as the functional form in the household maximization problem inside the RCK model?

Currently I'm studying the RCK model at my Advanced Macroeconomics I classes. A question arose almost immediately when I saw the utility function of a household in this model. The question is: why ...
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1answer
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S=I in a closed economy

In a closed economy, the national income identities imply that $$S=I$$ However, the intuition is not clear to me. The saving is the part of national disposable income that is not consumed. $I$ is the ...
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Endogenous technology

Given the following endogenous knowledge (technology) model where production function is as follows - Can anyone tell me - For what values of φ does this model get closer to a Solow model of growth? ...
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trade unions maximisation problem

I don't understand how to first order condition yields that result or how the chain rule is used to get that result.
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1answer
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Does open source software contribute to GDP?

Does open source software contribute to the GDP of a nation? If yes then how, and how does it depend on the increase in usage? For instance, would an increase in the usage of open source software ...
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Intepretation of $dC_1=-\theta(dT_1+\frac{dT_2}{1+r})=0\Longleftrightarrow dT_1=-\frac{dT_2}{1+r}$?

We are studying the Ricardian equivalence in a macro course and we are asked to show that a tax cut today will be matched by a tax hike tomorrow. I believe the above is supposed to be the solution, ...
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Macroeconomic models with labor-replacing capital?

I am reading article http://public.gettysburg.edu/~tlin/research/robots-main.pdf "A New Keynesian Model with Robots: Implications for Business Cycles and Monetary Policy" and I wonder how actual this ...
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real exchange rate formula doubt

Real exchange rate formula is the exchange rate multiplied by the ratio of two prices. what does this ratio actually imply? What is the rationale behind taking the ratio?
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Real exchange rate

I have a doubt: I'm studying about real exchange rates and I'm having some problem with the formula. RER= NER* price ratio What I don't understand is how do you take this price ratio? Which price ...
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Why does a reduction in money demand lead to a rightward shift in the LM curve?

In my textbook, it says Y must rise to restore money market equilibrium as the justification.
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Bank Runs During the 1930s

Why were there numerous banks run right after the stock market crash of 1929? Why would a bank fail because the stock market crashes?
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question on exports, imports and exchange rates

I understand that exports and imports of a country can be affected by the real exchange rates and purchasing power measured by GDP. Taking US and Japan as an example, why is the GDP of Japan ...
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How is there full employment level at equilibrium level according to Keynesian theory(AD-AS approach)?

According to Keynesian theory :- Equilibrium level is the point at which Aggregate Demand curve intersects Aggregate Supply curve . And this point is termed as Full Employment Level How do we ...
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How is Aggregate Supply(Willing) equal to National Income(Actual)?

Acc. to definition of Aggregate Supply It is the total value of final goods and services that the producers are willing to supply in country . Definition of National Income It is the value of ...
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How is employment related to aggregate demand and aggregate supply?

When we talk about excess or deficient aggregate demand , how does employment suddenly comes ?
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1answer
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Analyzing vast economic/financial data

I have data science projects coming up in a university course in the upcoming quarters, and I was interested in using financial/economic data since there is so much of it. Also, I do have a hobby for ...
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1answer
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Breaking Up The Big Banks

How can banks break themselves up? If they refuse to how can the federal government force them to break up or break them up themselves?
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Hayek’s Free Market Economy [duplicate]

Many economists teach that monetary inflation is considered healthy for the economy - to an extent. However a new way of thinking has emerged with the rise of cryptocurrencies that teaches the ...
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What is Application of Vector Algebra in Economics?

I through one tutors heard that vector is used in economics . But on searching about it on internet could not find anything Recently I studied about Vectors in Mathematics So I was wondering how ...
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1answer
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How can Factor Income paid to abroad be negative?

There was a question in my book in which the factor income paid to abroad was given as negative . I guess here negative means that we are not paying but receiving from them but how can it happen that ...
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4answers
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Do consumers also invest?

Definition of Investment that I have found: Investment is the expenditure incurred on the procurement of such capital assets that would help in further production . According to this, it means that ...
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Bond pricing. Yield of maturity, why not C in the equation?

Consider a two-peropd corporate bond with the following characteristics. The bond was issued at $t=0$ with face value $FV=100$ at $t=2$. IN period $t=1$ and $t=2$ of 5 are paid out ($c=5$. We're in $t=...
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Why having Silver/Gold cover can be bad for bankers?

I was randomly reading on the assassination of John Kennedy. And I found that some of the possible reasons why he was assassinated, is because he was planning to issue some kind of silver cover. Such ...
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Is the definition of Investment variable in Economics?

I studied that Investment is the expenditure incurred on the procurement of such goods that would help us in production of goods and services. And mainly consists of Fixed and Inventory Investment ...
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1answer
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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 ...
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1answer
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Why doesn't Aggregate Demand mean National Income whereas Aggregate supply is equal to national income?

Aggregate Demand is Basically $$ AD = C + I + G + X - M $$ Is not this national income Through Expenditure Method ? Then why don't we treat AD equal to National Income ?
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Do all OLG models posess the possiblity of dynamic inefficiency?

Do all OLG models posess the possiblity of dynamic inefficiency or is this just a feature of the diamond model?
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How do central banks earn profit?

I thought of Central banks as the regulators of financial markets. But surplus reserves of some Central banks surpass giant corporate companies. Please explain me how do they manage to make profit in ...
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Diamond OLG model: Understanding Dynamic Inefficiency

I've been having difficulty understanding how exactly dynamic inefficiency occurs both mathematically and graphically in the Diamond OLG model. The reason why I'm saying this is because even after ...
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1answer
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Wealth Creation: Where does the money come from?

I'm trying to better understand wealth creation– let's use trade as an example. I've bought a cup for \$2 and sold it for \$10. We've "created some new wealth" there– but without a net increase in ...
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1answer
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The Effects of Demonetisation

I do not wish to get into the details of the Demonetisation implemented by the Indian Government on 8th November, 2016. Endless political debates have already been conducted advocating or berating ...
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Is this how a stock price determined?

Instantaneousfinalstockprice = (initial stockprice/number of stocks) + currentstockprice I know people think there is no math. NASDAQ uses an algorithm that is determined by demand and supply. Is ...
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1answer
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Lecture note recommendations for the endogenous growth model (EGM)

I'm curious if anyone has a recommended lecture notes, slides, or book, anything really, that goes through evolutions of basic models like $y=AK$, to $y=AK^aL^{1-a}$, to $y_t=A_tK_t$, to $y_t=A_tK^{a}...
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How did US supply of Gold become less than foreign claim to gold?

My understanding is that US ran consistent current account deficits in the 60s and 70s, which led to a substantial net outflow of dollars. But, given that each ounce of gold was pegged to $35, how did ...
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Government policy on emerging financial instruments: historical evidence?

After coming across a recent statement from David Gerard (perhaps best known for his book: Attack of the 50 Foot Blockchain) on the topic of bitcoin, my interest in emerging financial instruments was ...
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1answer
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What are key economic mechanisms explaining long term damage during Great Recession [closed]

can you tell me what could be key economic mechanisms that explain long-term damage of the Great Recession?
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How does the economy of a city work?

I'm interested in learning how the economy of a town is analyzed. For instance, some occupations serve only people in the town, for instance the town grocer, baker, restaurant, dry cleaner, etc. Their ...