# All Questions

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### Applying Econometrics to Monetary Economics

I've been given a problem in which I am told that GDP is a function of the supply of money, prices and demand, $$Y = (M/P)^\delta$$ Taking logs, $$\log(Y) = \alpha + \beta \log(m - p) +u$$ ...
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### Stimulus (Rescue) Package

With regard to the recent 2 trillion dollar coronavirus package, is the money just being printed or borrowed? A gentleman from the tax payer union claims the taxpayer will eventually be on the hook.
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### The derivation of Central bank's loss function?

How to derive the central bank's loss function?
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### Given $f(x_1,x_2) = \min\{x_1,x_2\}^\alpha$ find the profit-maximizing factor demands, supply function and profit fuction

Given $$f(x_1,x_2) = \min\{x_1,x_2\}^\alpha$$ I have to find the profit-maximizing demand functions, supply function and profit function but I am not sure how to when the function is given as it is. ...
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### What is the difference between trade deficit and current account deficit?

I read this article and still don't understand the difference. "Spends more money on what it imports compared to the money it receives for what it exports" (how it defines current account deficit). "...
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### Deriving a demand curve from a Cobb-Douglas utility

Probably a daft question but I derived an equation for a demand curve from a general Cobb-Douglas utility function $$U(x,y)=\beta x^{\alpha}y^{1-\alpha}$$ given a budget constraint $$M=xP_x+yP_y$$ and ...
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### Intertemporal Slutsky and Endowment

To make sure I'm understanding Slutsky's equation and intertemporal choice correctly: given a choice between consumption today and consumption in the future, an increase in the interest rate will ...
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### How can you profit from junk bonds and selling treasuries, if the junk bond doesn't default?

Junk Bond/Treasury convergence Typically junk bonds, given their speculative grade, are undervalued as people avoid them. Therefore the spread over treasuries is more than the risk of default, by ...
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### Is it detrimental if self-interest is not acknowledged in resource allocation situations?

Please note: I am doing a literature survey/review, and I would like references to published work. I contend that if we are dealing with a resource allocation mechanism that allocates scarce ...
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### How's a levered hedge fund effectively selling a gigantic put option on its ability to finance its own positions?

I grasp the basics of a put option. John C. Hull. Options, Futures, and Other Derivatives (2017 10 edn). pp 8-9. A put option gives the holder the right to sell the underlying asset by a certain ...
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### What should Lowe's(the home improvement company) do to keep their company profitable during the next recession?

During the 2008-2009 recession Lowe's lost money because they did not act fast. What can Lowe's do in the event of a new recession to prevent a similar situation from occurring again.
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### What amount of Quantitative Easing will cause hyperinflation?

You all know that Quantitative Easing shifts the LM and AD curves right, so I haven't taken the time to redraw this picture. What's the maximum amount of Quantitative Easing that the Federal Reserve ...
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### Can the Federal Reserve's Quantitative Easing negative interest rates?

When I did my B.A. in economics, I never thought about extending $L(i)$ to negative y-axis. What if a central bank like the US Federal Reserve now quantitiatively eases more and shifts $\dfrac{M}{P}$ ...
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### Does the sudden spike in the US jobless claim pose systemic risk to the US unemployment insurance system?

There has been an unprecedented short-term increase in US unemployment owing to the Covid-19 crisis. Initial jobless claims soared to a seasonally adjusted 3.28 million in the week ended March 21, ...
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### How can the Federal Reserve Chair lack any degree in economics? [closed]

Jerome Powell has no degree in economics! I see he has worked in finance, but working in finance unquestionably isn't the same as degrees in economics! Thus how's it reasonable for Obama to nominate ...
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### What does this sentence (from Galbraith) mean?

In Galbraith's Economics in perspective. A critical history (a spanish edition, bear that in mind), by chapter 2 the author says: The conservatives, in a non-socialist economy, proclaim the right ...
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### Why is the Dollar Index strong after the Fed dropped the Fed Fund Rate?

I have a query about the current forex market. In 16 March 2020, the US Federal Reserve Bank announces to cut the interest rate to 0%. This move supposedly weaken the Dollar Index, but why for a ...
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### Why isn't the Federal Reserve bothered by the drawbacks of its unlimited Quantitative Easing?

On Mar. 26 2020, Fed announces unlimited QE and sets up several new lending programs : finance. I know little on the U.S., as my B.A. economics degree is from a Ontario university. If I remember the ...
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I studied in Canada, and don't know much about U.S. On Mar. 26 2020, the Federal Reserve’s Balance Sheet Tops $5 Trillion for First Time : economy. I quote MarketWatch In an NBC News interview ... 0answers 23 views ### According to human capital theory, in which country will citizens be more likely to go to college? Assume that in country A college tuition is 10,000 per year, citizens save 5% of their income for retirement, and there is a mandatory retirement age of 60 years old. In country B, the tuition for ... 0answers 43 views ### What are the exact sources of CARES Act economic transfers? The bill Coronavirus Aid, Relief, and Economic Security Act provides "2 trillion". (There is also H.R.6201 - Families First Coronavirus Response Act providing aid.) From which sources will the ... 2answers 48 views ### Why does global suspension of economic activity result in catastrophic loss/debt? Covid-19 has forced a suspension of at least 50% of financial transactions and business activities. Materially, not much has been lost: consumables have been spared, equipment is dormant, ... 0answers 16 views ### supply and demand problems [closed] how do you calculate the supply and demand given the amount of suppliers and their quantity supply and amount of consumers and their quantity demand producers: 100 Qs: -100+20P consumers: 10000 Qd: ... 1answer 30 views ### Is it possible for a firm does not have shutdown point? If a firm has a quadratic cost function, is it means that the firm does not have shut down point and never shut down? Are the changes in fixed cost do not affect the firm's shutdown decision? 1answer 23 views ### Won’t paying wages to temporarily unemployed due to Coronavirus result in inflation? UK government promises to pay 80% of wages for people unemployed due to coronavirus. I am not economist, so I am probably missing something, but shouldn’t paying wages to unemployed due to coronavirus ... 1answer 30 views ### Why is investment included in GDP? Why is real investment included in GDP? I thought GDP is only supposed to measure final goods produced? I thought capital is an intermediate good but I guess I am wrong. An intermediate good is sold ... 1answer 41 views ### Difference(s) between Rational Expectations Equilibrium and Nash equilibium What is the major difference between the notion of rational expectations equilibrium and Nash equilibium? And why do we, only, have a rational expectation about the first moment (the price) in the ... 1answer 31 views ### Finding an instrumental variable for unemployment I have the following regression model: Marijuana Usei = β0 + β1Unemployedi + β2Personal Incomei + β3Educational Attainmenti+ β4Sexi + β5Agei + β6Racei + εi The model is a probit model I need to ... 2answers 86 views ### How is the Corona$2 trilion stimulus package going to be financed?

Perhaps this is a simple question but as a non-US citizen I don't understand how the US government is going to finance the \$2 trillion stimulus package to combat the economic damage due to the Corona ...