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Inferior and normal good and the change in price of those goods

In general, We know that if a good is normal, then as your income increases, then demand of that good increases as well as price is fixed. Similarly, if a good is inferior, then as your income ...
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1answer
55 views

Indiference between two lotteries

Suppose that a binary relation satisfies only: Independence axiom: $L≿L′⟺α\circ L+(1−α)\circ L′′≿α\circ L′+(1−α) \circ L′′$ Reduction to simple lotteries: For all $g$, $g~g'$, $g'$ is the simple ...
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1answer
42 views

Economic impacts of Migration on the Labour Market

Many natives don't prefer foreigners taking their jobs, is it actually a bad thing for the countries economy?
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1answer
29 views

Productivity issue

Could someone help with the following? Company produces products of daily demand. It employs workers In number of 12 people (HER) Wages of workers. The costs of hiring and firing are 25 per employee, ...
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2answers
66 views

Calculate real GDP

Assume that the annual growth GDP per capita is 2%, how much will the real GDP per capita increase in 10 years. I know the manual way is to take 2 percent every years. For example after 1 year would ...
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1answer
108 views

Stochastic process difference equation: stationary distribution

How can I find the stationary distribution (as t goes to infinity) of stochastic difference equations in the form: $x_{t+1} = a*x_t + b*N(0,1)$ where N(0,1) is a standard normal pdf I have ...
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2answers
60 views

How much of an assets price change is due to speculators and functional buys/sellers

If (for example) a heavily traded asset like crude oil has a price move of x, how much of that is influenced by functional buyers/sellers and how much by speculators? Let's say x is +100, there are 8 ...
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1answer
100 views

Inflation and stock price

I have indicated my understanding and problem on the attached image below. I'm a bit confused on the impact of inflation on stock price. As increase in inflation would cause nominal interest rate to ...
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1answer
39 views

Central Banks Currency being used as value keeping hypothesis

I recently came up with the idea that all the worlds currencies with central banks may be being used as a way to steal value from people who give value to them. And no, im not talking about inflation (...
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1answer
1k views

What is the difference between quoted price and theoretical value of a bond?

When we refer to "quoted price" of bond, or "clean price", it is equivalent to refer to his "present value" or "theoretical value", which corresponds to the price that I invest in the bond? For ...
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1answer
1k views

Quick Question on Production Possibilities Frontier Curve

Can someone please tell me how or why the curve shifts outward. In the textbook, I was given that: "But if we cut production of mobile phones to 3 million this year, we can produce 2 mobile phone ...
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1answer
77 views

New-Keynesian-Economics

interest rate in Talor rule is considered as endogenous or exogenous? Similarly there are some fiscal policy rules in assuming fiscal instrumens like government expenditure and distortionary taxes ...
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3answers
186 views

Explain inflation to an economic novice

I'm trying to get a grasp on how exactly inflation works. What I've read so far seems to be contradictory. In some articles I've read that government spending is always(?) inflationary, and in ...
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1answer
2k views

Advanced Microeconomics: Deriving Slutsky Equation

I am not sure how to derive the demand for consumption of today's bread; the first thing the problem asks for. I think it might be a piecewise function based on the interest rate that gets you from ...
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1answer
4k views

What is the list of countries where the central bank prints money?

Is there a list of the countries where the central bank is creating money, today ? How much ? We know for: EUR: Euro countries (since ECB QEs) (and euro-bound countries as DKK ?) YEN: Japan (BOJ '...
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1answer
49 views

Including variable with causation problem for estimating from LISS

I am using panel data from the LISS to estimate the effect of whether a person practices sport or not on appreciation of leisure time (scale 0-10). My partner insists on using a variable that ...
-1
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1answer
242 views

Price Optimization from Data

How can I find the optimal price that maximizes profits, given past sales data? I thought I could do this, but I've been running into problems. Data: ...
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1answer
44 views

Meaning of Exchange rate

Does exchange rate of local currency relative to US dollar mean LOC/USD or USD/LOC ?
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2answers
117 views

Why does a weaker currency make sovereign debt cheaper?

Investopedia tells me that a weaker currency will reduce sovereign debt burdens. It is quoted as saying 'a weaker currency makes [these] payments effectively less expensive over time.' However, I ...
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1answer
30 views

CEO Compensation in Banking Data

My main goal is to compare CEO compensation for banks across different countries. Does anybody know where I can find data on CEO compensation for banks for different countries or a paper which ...
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1answer
515 views

Balance of Trade - Currency devaluation in a price taker economy

How will a real exchange rate devaluation affect Balance of Trade, if an economy is a price taker in world markets for both export and import?
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2answers
40 views

Does demand side economics only apply to manufacturing

For example, if investment falls then manufacturing falls. but there is no investment in secondary markets. Wouldn't recessions cause factories to collapse but why would they affect realtors, used ...
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2answers
57 views

How does real gdp affect the domestic currency?

When the domestic real gdp per capita increases then it has a negative effect on domestic currency (depreciation)? Why? Source: The real exchange rate of euro and Greek economic growth, Gregory T. ...
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0answers
25 views

Question about Static Game with 3 firms

I need an answer to the following question. I can't quite get the approach to answer it using a cournot competition model. Consider a static price competition game of three firms; each owns a product. ...
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1answer
51 views

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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1answer
42 views

What are ways in which world markets are zero-sum games?

Mercantilism is notorious for treating the world economy as a zero-sum game, wherein the local economy is supposed to benefit when regulations that operate to the detriment of foreign economies are in ...
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1answer
278 views

Maximizing a Cobb-Douglas Function

Suppose that a competitive firm receives a price of $P$ for its output, and pays prices of w, r and v for its labor $(L)$, capital $(K)$ and natural resources $(R)$ inputs, respectively. The firm ...
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1answer
47 views

Why don't we mint more m0 instead of creating m1 through fractional reserve banking?

From what I understand, m1 money is just as liquid as m0 since an individual can withdraw it from the bank at any time and in any quantity (up to the amount (s)he deposited). Because of this I don't ...
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1answer
64 views

Why don't banks just buy m0 and create unlimited loans?

In fractional reserve banking a bank can buy m0 and use it to create any amount of m1/m2. Why don't they do this? The loans could be just banks lending each other at 0% interest to create unlimited ...
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1answer
54 views

Beta delta Agent - Consumption decision

I’m struggling with a problem regarding the beta delta agent. Can someone give me a hint how I can come up with the levels of utility? Thanks in advance!
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1answer
485 views

Equation: If the equilibrium level of GDP is $21,500, what is the marginal propensity to consume?

Equations for $C$, $I$, $G$, and $NX$ are given below. If the equilibrium level of $GDP$ is $\$21,500$, what is the marginal propensity to consume? $$C = 1,500 + (MPC)\cdot Y$$ $$I = 1,000$$ $$G = 2,...
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1answer
68 views

Causality: Money supply and prices

When there is an increase in price level, real money supply decreases and raises interest rates. In a similar situation, when money supply decreases, interest rates increases, consumption decreases, ...
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1answer
4k views

Income effect for complements

Suppose u(x,y)=min(x,2y) and the price of X is 1, the price of Y is 1 and income is $12. If the price of X increases to 2, the income effect is supposed to be -1. I keep getting zero for some reason. ...
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2answers
137 views

Who owns money?

Bishop Nicole Oresme (1320-1382), in the first monetary treatise, wrote: CHAPTER VI: Who owns the Money? (Cuius sit ipsa moneta?) Although it is the duty of the prince to put his stamp on the money ...
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1answer
370 views

How to calculate income and substitution effect when equal marginal principle is violated

I am trying to calculate substitution and income effect for 2 goods, $x$ and $y$. Given that marginal utility $\mathrm{MU}_x = 1$, marginal utility $\mathrm{MU}_y = -a$ (unknown number), price of $...
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1answer
48 views

How does the cost of switching over to green energy compare to the cost of the war in Iraq?

How does the cost of switching over to wholly green technology in the US at current prices and at current technology without factoring in possible improvements in efficiency or technology solely in ...
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3answers
58 views

What happens to demand economics when rates are negative?

Keynesian economics assumes falling lending opportunity lowers profit. Under negative rates less lending actually means More Profit. So how does this change things?
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2answers
209 views

Production function question

Some help with this would be appreciated.
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1answer
58 views

Why doesn't the Federal government just let the stock market crash?

In a normal financial crisis the government tries to maintain the stock market prices to prevent a spike in unemployment as companies collapse and run layoffs. But given that we're in the midst on a ...
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votes
1answer
32 views

Meaning of the sentence

I am having trouble understanding this economic concept: Consumer can obtain maximum utility only if he/she incurs expenditure on various commodities in such a manner as to equalise marginal ...
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votes
1answer
40 views

what would be an efficient investment when central banks have massive qe?

Recently the central bank said in a statement on its website. “Aggressive efforts must be taken across the public and private sectors to limit the losses to jobs and incomes and to promote a swift ...
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1answer
36 views

How is patience modelled?

How is consumer patience modelled? My first thought was "discount factors, but the problem is that it doesn't seem to capture the intuitive notion of what being patient means. For example, the ...
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1answer
53 views

Why do large financial institutions make international transactions in digital currency?

I've heard that blockchain technology has been used extensively by financial institutions when making international transactions to eachother, with speed and transparency and cryptographic security ...
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votes
1answer
79 views

How do currency traders resolve imbalances in the demand for different currencies?

Countries trade different amounts of goods that are inherently imbalanced. How do currency traders resolve these imbalances in the demand for different currencies? For example.... Imagine we have two ...
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votes
2answers
99 views

Where to begin with solving this table on Total Cost analysis?

I've been working on solving a table for the past hour or so, I'm completely lost as it appears the values aren't quite correct, this is what we've been given to solve: We've been given that the ...
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1answer
72 views

How to reconcile fact that “real interest=nominal interest - inflation” with prediction of the interest rate theory about expensivity of loans?

According to the interest rate theory higher price level will lead to following chain of events in the short run: Marginal propensity to save will decrease(ratio of spending/saving will change, people ...

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