# All Questions

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### Are there data for the evolution of global economic inequality

Please excuse my ignorance of economics. I recently learned about the Gini-Coefficient as a measure of the economic inequality in a country. I have since seen several plots of this coefficient over ...
7k views

### How is wealth created? [duplicate]

The production of 'goods and services' and 'innovation' is the usual answer. I feel that doesn't really answer the question. These things can be traded for wealth but they don't generate new wealth. ...
1k views

### What is the necessity of the FDIC in the US banking system?

A bank's basic function is to "borrow short and lend long". In other words, it borrows money from depositors over the short term, promising to repay it on demand, while it lends most of that money out ...
14k views

### Finding demand function given a utility min(x,y) function

I am confused about a particular point regarding finding a demand function. All the problems in this practice set I am doing have involved applying the method of Lagrangian multipliers. But I am ...
6k views

### Imperfect vs incomplete information

What's the difference? To illustrate, please give examples of A game with perfect but incomplete information; and A game with complete but imperfect information. Related.
37k views

### How to derive firm's cost function from production function?

I recently learned how to solve the following type of problem using the method of Lagrangian multipliers: Given a consumer with utility function $u(x,y)$, wealth $w$, prices $p =(p_x,p_y)$, budget ...
388 views

### Why is the inverted yield curve a good predictor of impending economic recession?

The inverted yield curve has often been cited as a good predictor of impending economic recession. What are the reasons to explain why is it a good predictor? Is the inverted yield curve a cause or ...
504 views

### How does US (its economy, banks, industry) profit from dollar being the “standard currency”?

How does US (its economy, banks, industry, "finance industry") profit from dollar being the "standard currency"? I am not seeking "ideological" explanations, but explanations of the mechanisms ...
4k views

### (Preference Relation/Set) Continuous $\succsim$ imply closedness of upper and lower contour sets

[ADDED/MODIFIED] : I have put my proof where the commodity space is simply $\mathbb{R_+}$(e.g. nonnegative reals) for simplicity below. Please share your 2 cent. I have put words to aid my own ...
1k views

### Why is modest inflation a good thing? [duplicate]

I have been reading a BBC news article about inflation in the UK, which is saying that inflation has recently become negative (http://www.bbc.co.uk/news/business-33147660). The article suggests that ...
134 views

3k views

### Available code for computing solutions to matching algorithms?

The question of designing matching procedure (between high-schools and students, med intern and hospitals, kidney donors and receivers,...) has been widely studied by economists and vastly contributed ...
1k views

### Alternatives to Pigouvian tax

Two common drawbacks of Pigouvian subsidy mentioned in the literature are related to monetisation and measurement of social cost (Baumol) and reciprocity of social cost (Coase). What alternatives to ...
2k views

### Is the economy a zero-sum game?

Theoretically speaking, if all the Earth's inhabitants were to save money and invest, is it possible for everybody to get, let's say, a 4% yearly return for everyone? Is the economy a zero sum game (...
2k views

### Why do top professional sport players get usually paid so much?

I'd like to find an answer to this question as I can't see how something like this can be happening. I can see three reasons that they would earn that much but any of them if thought better is wrong. ...
486 views

### Have automation and technological advance been shown to have a positive impact on society and the economy or a negative one?

My friends and I, 2 of which are computer science majors think it is worse because is humans can't work and thus afford necessities, how will they survive? The definition of automation: the use of ...
88 views

### Multiplicative factorization of stochastic growth time series--solving for an eigenfunction/eigenvector

I'm trying to understand the tools used/presented in Lars Hansen's Econometrica paper "Dynamic Valuation Decomposition within Stochastic Economies." In a part in the paper, Hansen introduces a long-...
13k views

### Does GDP count both the investment and the house rental?

Suppose you bought a new house in the year of 2010. Then the price of the house in counted toward the 2010 GDP. Say then you live in the new house in the following years. So in these years, the GDP ...
565 views

### Intuition: Difference in price elasticities of demand due to different bases

Source: pp 91-92, Principles of Microeconomics, 7 Ed, 2014, by N Gregory Mankiw If you try calculating the price elasticity of demand between two points on a demand curve, you will quickly ...
231 views

### Inflation basics and understanding

In some new country, there's 1 million credits in circulation, and Product X costs 10 credits. If I were to print, say, 500,000 credits and build a new swimming pool with this, how exactly would ...
448 views

### Why doesn't the price of gold drop as mining occurs that produces more gold?

According to my common knowledge, the price should drop when supply increases. Why doesn't the price of gold drop slowly as more gold is produced from mining?
881 views

### Showing that production technology exhibits decreasing returns to Scale

The Question Suppose a firm has a production function given by $$y=F(L,K)=L^{1/4}K^{1/4}$$ where L and K denote inputs used in the production of y units of output. (a) Determine whether marginal ...
191 views

### Is it possible that the minimum point of a short run cost curve does not touch the long run cost curve?

In the answer to this question, the answerer said "the minimum point of a short run cost curve will be above the long run cost curve". Is it true? If so, how would it be so? I thought that if e.g. ...
127 views

206 views

### Stock pricing with cross ownership

Cross-ownership is a phenomenon where companies own parts of other companies they do business with. An example: Two companies are now involved in the diamond operation, the mining group Anglo-...
2k views

### What are the pros and cons of eliminating corporate taxes?

I recently heard a story on npr about economic policy changes that both liberal and conservative economists definitively agree on. Among other things, complete elimination of corporate taxes was ...
787 views

### Is money capital?

The Oxford English Dictionary defines "capital" as n. economic goods (e.g. railways, ships, machinery, buildings) destined for use in production (as opposed to consumers' goods). Historically, the ...
162 views

### What is the appeal of DSGE models?

As far as I understand people like them, because they fit the data quite well when compared to VAR's for example while also having an economic interpretation. They appear to explain observations in a ...
14k views

### Why does the Balance of Payments have to (more or less) equal zero

It seems to me that the non-reversible transactions included in the current account, and the reversible transactions included in the capital and financial account, are unrelated, and should therefore ...