# All Questions

8,013 questions
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### How to build a Social Accounting Matrix from an Input-Output Table?

I built an Input-Output table (IOT) with the industryXindustry format because I thought it was a building block to build a social accounting matrix (SAM). But now I realize that I can't transpose the ...
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### Free Disposal: the production set less the vector space of positive reals

In Microeconomic Theory (3rd Edition), Mas-Collel, Whinston and Green state that the property of free disposal implies the following: $Y - \mathbb{R}^L_+ \subset Y$ Y: Production set y: Production ...
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### Leveraged Return on Investment

A general return on investment (ROI) formula is: $$\text{ROI}=\frac{\text{Net Profit}}{\text{Total Investment}}.$$ But if you think about an investment that requires some ...
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### Why are mortgage rates in USA so high compared to Europe?

What are the main reasons of high mortgage rates in USA compared to central Europe? In central Europe mortgage rates are about 75%-100% lower than in USA.
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### Production technology and efficiency

I have been practicing some questions on production function and efficiency and I came across the following questions. For question 1 what I did is, the efficiency of firm A in q1 = production of ...
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### Why are Hicksian demand curves unobservable

I have read this paragraph in a book (Jehle, Reny: Advanced Microeconomic Theory): I don't quite understand why Hicksian demand curves aren't directly observable? What does observable stand for in ...
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### Does a drop in GDP per capita, with the population staying around the same, mean people on average are poorer?

Essentially, I'm trying to determine if there is a correlation between a drop in GDP per capita (e.g. during the 2008 financial crisis, Australia's GDP per capita dropped from USD \$49,000 to$42,000 ...
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### Accounting of common stock and capital surplus for banks

I am trying to understand the accounting involved with bank capital and am a bit confused about the common stock and capital surplus lines on balances sheets. I would like to know if the following ...
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### Is there a standard methodology for calculating real prices?

Is there an established professional standard used by economic / financial institutions for including or excluding i) the starting year/period, and ii) the end year/period when calculating real prices ...
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### Gross interest rate ($R$) v. Net interest rate ($R-1$)

I am reading a macro-finance article that deals with asset financing. While it defines the gross interest rate to be $R$, it defines the net interest rate to be $r\equiv R-1$. In equilibrium, the ...
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### Theories relevant to institutional quality and economic development [closed]

I want to write a term paper on institutional quality and economic development. What will be its possible theoretical framework?
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### Predicting long term asset returns

I am currently trying to form an overall asset allocation strategy which combines base strategic allocation and tactical shifts. My model already incorporates the tactical shifts using various factors ...
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### Perfectly competitive firms. Economies of scale

My textbook says the following: "Perfectly competitive markets only achieve productive efficiency if you assume that there are no economies of scale in the industry." Why is this the case? And by "...
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### Can tariffs be said to subsidise domestic industry?

If a state places a tariff on a good, domestic manufacturers of that good become more price-competitive in the domestic market at the expense of overseas suppliers. Could this be said to be a policy ...
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### Does the gravity model of trade apply equally for goods and services?

Does the gravity model of trade apply equally for goods and services? Naively it would seem that the more ephemeral services would be less impacted by it?
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### Quantity theory of money

Suppose the velocity of circulation (V) is constant. Annual growth rate of real GDP is 5%. The money supply grows by 14% per year. Use the quantity theory of money to calculate the inflation rate. My ...
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### Nominal and real government expenditure

I just need to know that how to make a data series of real government expenditures using nominal government expenditure data series.
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### How would one take advantage of this arbitrage opportunity?

I have a quick question about how arbitrage works. Let's say that there are two investments: Invest in a two-year zero Invest in a one-year zero and then reinvest into a forward contract from year ...
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### How to interpret the (expected) exposure and CVA of an option or a single share

I have a quick (hopefully simple) question regarding the interpretation of the expected exposure of a call option and a single share. I've done some computations on the formula for the expected ...
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### Is protectionism more suited to large economies?

Large economies like the US and China use tariffs as trade weapons while retaining competitiveness because they have the critical mass to encapsulate supply chains and avoid the cost of cross-border ...
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### Bandwidth, latency and price

Can a market be seen as a set of nodes (market actors) connected by edges with bandwidth and latency characteristics? Are these terms used in economics? If so would an import tariff affect bandwidth ...
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### Should I include lags in an LLC unit root test?

I have panel data (N = 10, T = 20), which I intend to run a series of regressions on. I first want to see if my data are stationary in levels or in differences. To do this, I have been performing ...
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### How can capitalism be improved? [on hold]

Many people want to try socialism because of valid criticisms of capitalism. So, are there any good ideas on improving the problems of capitalism before we go down the path of socialism?
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### Currency board, why the fluctuation in local currency

I have very basic question about currency boards: Assume that a country floats a new local currency "N" with the currency board model. It uses USD as the reserve currency. To begin with 1 N = 1 USD. ...
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### By what mechanism do large economies affect world price with tariffs?

Large economies can affect world prices by applying import tariffs. Is this because they definitionally comprise a substantial portion of global consumption, and hence by shifting production ...
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### Sequential game equilibrium strategy question

The question asks for player B's equilibrium strategy, hence shouldn't player B choose the strategy that gives the highest payoff after player A's move? Why does player B choose 4 over 5 and 6 over 8 ...
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### Can there exist something that subsidises that is not a subsidy

Is the set of subsidies exactly the same as the set of things that subsidise? Put another way: can there exist something that subsidises that is not a subsidy? Or are there two definitions of a ...