# All Questions

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16 views

### On the beliefs on the nature of Economy, Money and Profit

I have been taught in Money and Banking that money is any entity that has the following properties. 1 It is generally accepted as a means of transactions. Nonetheless how much is "generally" is a ...
12 views

### Can i check monotonicity with the marginal utility?

For example I have a Cobb-Douglas utility function $U(x,y)$ and I want to check the monotonicity property. Can I use the marginal utility functions to see that they are always positive to conclude ...
11 views

### Does finding real income adjust for inflation?

I have been reading from this textbook which talks about CPI and inflation http://faculty.washington.edu/cnelson/Chap04.pdf On pages 5 and 6, it talks about how they are deflating the nominal ...
14 views

### How does the Federal Reserve reduce “excess reserves”?

Over the last few years, the amount of currency is circulation (and the corresponding liability on the Fed's balance sheet) has been growing; however, the asset side of the BS hasn't increased. By ...
32 views

### Explain this excerpt from a book by a Nobel Laureate

Rents are dissipated whenever the marginal returns from appropriation process are smaller than the marginal costs of appropriation. What does this mean?
14 views

### What is the privilege of a primary dealer?

Primary dealers have a privileged position, so there is value in being registered as a primary dealer. - https://economics.stackexchange.com/a/13450/8387 I was previously under the assumption that ...
20 views

### Game theory classic literature and specific topics

I am starting this conversation because I am searching some book in game theory for the classic problems that the literature encounnters. More precisely, I would like to know if there is some book ...
27 views

### Why aren't open market operations a zero sum transaction?

I know that when the Federal Reserve buys Treasury bonds it increases the money supply, but I don't understand the process behind it. The model that I have given below (which is my best understanding ...
33 views

### The Fed Lowered Interest Rates, Are they going to buy Bonds?

I originally asked this question on personal finance/money because I didn't know that this exchange site existed. link to same question at person finance/money. Someone on that site mentioned that it ...
13 views

### What is the the return to scale of per capita production function?

if Y=f(AL,K) is CRS, a_k+a_L=1 by euler thm. but I wanted to know the return to scale of y=f(1,k) (1/AL divided) I tried z=p/AL , then py=f(p,pk) differentiate w.r.t p ; y=fp+fpk*k ...
11 views

### Quasi-Hyperbolic discounting

I am new to behavioural economics and I'm trying to work through a question. I understand the question but I don't know how to go about it as the example questions I have seen normally provide beta ...
40 views

### Utility function is given as U(x1, x2) = 10x 0.5 1 + 5x2

Given a utility function $U= {10x^{0.5}} + 5y$, calculate the MRS and explain its economic meaning. The MRS I calculated is $\frac{1}{\sqrt{x_1}}$, but I can't really understand it's economic meaning ...
13 views

### Is there a widely accepted definition of “asset [price] inflation”?

A bit of googling found some conflicting ones... Capel and Houben (BIS) Asset inflation occurs when the prices of financial assets are rising even though they are already above their intrinsic or ...
16 views

### Hotelling model question with collusion

If in a hotelling model question the two firms decide to collude what is the process of working out the optimal price for the firms if: The firms decide to collude such that firm 1 takes all the ...
56 views

### Why is that when one person or group gets a good or service, someone else will have to live without it?

! There's this statement in my Applied Economics book that I don't understand. Why is that when one person or group gets a good or service, someone else will have to live without it? I hope you ...
12 views

### Quarterly frequency version of the Fama-French factor models?

All Fama-French (and other) factor models are based on an annual frequency of financial reporting and portfolio holding periods. Is there any research on quarterly factor models in the context of ...
22 views

### Cross derivatives of payoff functions in potential games

In Monderer and Shapley (1996) (pdf) there is the following theorem. The next theorem is well-known (and very useful). THEOREM 4.5 Let $\Gamma$ be a game in which the strategy sets are ...
38 views

### Confidence Intervals for Elasticity in Simple Linear Regression

I'm pretty sure this is a very simple question that I am missing something obvious. I have a simple linear regression with multiple independent variables. I want to calculate the elasticity (no ...
31 views

### Is there an externality if someone buys all stock of some merchandise?

Is there an externality if someone buys all stock of some merchandise? On one hand, if they buy all of everything and there's still demand then they've taken it away from other people. On the other ...
28 views

### Sequential Price Competition for Perfect Complements

There are two goods, $1$ and $2$ produced by two firms at zero marginal costs. The goods are perfect complements. The demand for each goods is: $Q_1=Q_2=a-(p_1+p_2)$. The prices are set sequentially, ...
17 views

### Sen's property $\alpha$ holds when limited attention in choice?

Consider the limited attention choice framework by Matejka and McKay (2015). This framework can give rise to consideration sets, as roughly summarised below. Consideration sets in the limited ...
13 views

### When is the solution to an EMP not that of an UMP

Can you construct an example with p $\geqslant$ 0 such that the solution of EMP is not the solution of UMP.
21 views

### What is it about the money market safeguards that increase volatility?

In recent coverage of the Fed's repo operation, I was struck by this line: It also indicated Wall Street is struggling to absorb record sales of Treasury debt to fund a swelling U.S. budget ...
16 views

### extensive vs intensive labor in US in recent decades

Total Hours worked is a mix of extensive (to work or not, the usual standard working week) and intensive (how many hours to work). I'm interested in how this balance of extensive and intensive ...
11 views

### Unemployment, reemployment probabilities

Does anybody know where to look up the following unemployment-related figures: Probability of becoming unemployed in a given period (month/quarter/year) Reemployment probabilities in a given period (...
45 views
+50

### LM curve: How interest rate is changing without OMOs by the central bank?

The following is the gist from chapters - 3, 4 & 5 dealing with IS-LM model from Macroeconomics, Blanchard & Johnson, 6th edition. Equilibrium in the financial market implies an increase in ...
34 views

### The effect of Monetary Policy on Asset Price Inflation

My macroeconomics professor told the following: A decrease in interest rate causes that consumers rather spend their money on investments (stocks, houses) than put the money on the bank, and the ...
10 views

### Relationship between Fiscal policy and net exports

I am confused about the relationship between fiscal policy and net exports. Suppose government goes for expansionary fiscal policy Case 1  - If public expenditure rises, income rise, rise in ...
19 views

### how can two countries have the same level of output per capita but different levels of factor accumulation and productivity? [on hold]

This is a question in my growth class on the PPT. Pretty confused by it. I tried drawing it out but have had no luck getting over this.
18 views

### What would mortgage payments be if monthly payments were constant in real terms?

From the Wikipedia: The fixed monthly payment for a fixed rate mortgage is the amount paid by the borrower every month that ensures that the loan is paid off in full with interest at the end of ...
31 views

### Does higher tax on luxury goods does more harm than benefit?

I was studying Fiscal policy and I came across measures to reduce income inequality by using fiscal tools. One of the tool mentioned in that was - Higher taxes on luxury goods This makes sense that ...
10 views

### Questions regarding 'Efficient Trade with Interdependent Values' by Marek Pycia and Peng Wang,2015

This question is with reference to the paper 'Efficient Trade with Interdependent Values' by Marek Pycia and Peng Wang,2015(See here). At page no. 4 of the paper, the authors describe $v_i$ as the ...
69 views

### Bertrand Duopoly Equilibrium for Discrete Prices

There are two identical firms, $1$ and $2$, with zero marginal costs. They produce homogenous product, which is demanded by a unit mass of identical consumers, each of which has inelastic unit demand ...
19 views

### How does monetary policy affect inequality?

My thought process here would be that since government bonds are usually held by the richer households, buying of these government bonds would inject a large amount of money only to the richest, thus ...
74 views

### Name of example of irrationality of proportional and absolute cost

I am trying to give a puzzle from behavioral economics illustrating on the irrationality of thinking of costs in proportional rather than absolute terms. I remembered vaguely an example like this but ...
19 views

### Where can I find an endogeneity proof for bias by LLN?

It is intuitive that E[xe] is non-zero but the result E[xe]=sigma(x)*sigma(e)*corr(xe) seems odd. Please help point me in the right direction.
15 views

### Health economics maximisation problem [on hold]

I am trying to study for a Health Economics exam and I was wondering if anyone could help me with the logic of one of the questions. I can't understand the basic logic from which to approach part a. ...
50 views

### Real world evidence that voluntary exchange is mutually beneficial?

The other day I was having a debate with a supporter of high taxes. I decided to argue against this by explaining the concept of the deadweight loss of taxation. In order to do so, I started with ...
20 views

### What is the socially optimal solution when MSB does not equal MSC at any point? [on hold]

I had an economics paper today, and there was a question for finding the socially optimal level of pollution given the benefits to factories and cost to citizens. We were given a set of discrete ...
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Suppose there is some exogenous shock in the economy due to which the production of oil has fallen dramatically. Also, let's assume that oil forms a substantive part of the economy's production. What ...
45 views

### Standard Macro Model Intuition

In the standard model of Aggregate Demand and Aggregate Supply which display equilibrium in all the markets, I often get confused on how a change in one variable will shift curves. Say, output ...
37 views

The term "public bad" is sometimes used for "goods" which, like public goods, are non-excludable and non-rival, but which tend to lower rather than raise welfare. Air pollution is an example. For a ...
10 views

### What is the most accessible work of Herman Daly?

I am an undergrad with limited experience in the fields of economics and ecology, and having recently discovered the work of the celebrated economist Herman Daly, who has been writing for decades ...
24 views

### Why does inequality fall in recession [closed]

Why is this so common. Is new keynesian recession even possible if inequality falls. Maybe find some cases where inequality doesn't fall.
20 views

### What is the formula for finding derivation of total annual revenue for any year [on hold]

I'll to explain this as best as I can, with what I've got. Say you have a gantt chart and have calculated the total weeks in starting a business. You have a loan with a draw down with an interest ...
17 views

### What are some historical examples of laissez-faire capitalism?

I suspect both supporters and detractors of laissez-faire capitalism have some historical examples in mind that they consider reasonably close to an ideal or to a "natural experiment". (The examples ...