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40 views

Which currency do we consider when talking about trade balance ?

The Marshall Lerner condition and the J curve made sense until one day I noticed that to make sense of all of this , we considered two different currencies. I was told for e.g. in the short run, ...
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1answer
63 views

Present Value Analysis

For my exmaple, we have machine A with an initial cost of 15K and O&M of 2k per year for the next 4 years. After 4 years, the O&M rise to $2.7k per year. No salvage value and life span of 20 ...
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1answer
45 views

Can the amount of loans and deposits in entire banking system differ significantly?

Can the amount of loans and deposits in entire banking system differ significantly? When regarding the entire banking system, what factors impact the loans to deposits ratio? Is it roughly constant ...
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1answer
26 views

Determining the capital return from the investment in dynamic firms and their growth

According to Tech Tour Growth 50, an organization that identifies the. young firms valued between one hundred millions and one billion dollars and which benefits ("chiffre d'affaires" increase by 50% ...
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1answer
106 views

How is it economically responsible to destroy proprty which has value? [closed]

precursor: bitcoin.stackexchange.com/q/1851 How can it be economically responsible to destroy property which has value? If a property is destroyed (which is the right of the property holder in most ...
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1answer
42 views

Formulas or rules regarding End of Life for vehicle

Are there formulas or rules when keeping a vehicle is no longer financially beneficial? I understand the below needs to be considered: Every time a purchase is made, sales tax will need to be paid. ...
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1answer
136 views

maximize profit of competitive firm in short-run

Consider a competitive firm with the short-run cost function $C(q) = 20 + 6q +5q^2$. The firm faces a market price of $p$ for its output. (1) Find the firm's Profit Maximization problem. (2) Find F....
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1answer
274 views

If South America were to unite as one country would they become an economic superpower? [closed]

Often borders can hold back different parts of the world and if they consolidated together they could succeed so much more. What would be the pros and cons If South America were to break down their ...
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1answer
55 views

Interpretation of price indices

How can cpi 3.41 and Wpi 3.54 be interpreted? I know that cpi gives the inflation rate but what is it that we understand from these figures?
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1answer
47 views

Game Theory of Two Firms

There are only two firms that produce and sell hockey equipment, Abel Corporation (A) and Baker Company (B). They each sponsor special events to try to gain customers. As there are only 2 firms, the ...
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1answer
48 views

Deriving support in bidding strategy

I'm considering some question, and I'm not sure what it asks me to do: Consider a two-bidder auction with two types of players, high type and low type ($v_h>v_l$). The probability of a low ...
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1answer
59 views

Does Russia Prevent Gold Exports?

The Sirius Report tweets: Surprises me how anyone imagines that #Russia only has 1800+ tons. Just look at the fact that they never export #gold production and what they have annually produce for ...
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1answer
34 views

Disruption vs economic growth vs inflation

On the terms: Disruption is when new players earn say 1m but take over of a 100m market segment, causing damage to well established but less innovative businesses economic growth is what we read ...
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1answer
108 views

rates vs. level

For my thesis I will run some regression (OLS and ML: Probit). I like to distingish between variables in growth rates and variables in level form, if there is any important issue that I have to ...
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2answers
104 views

Bank Capital and Profit

I am struggling a bit with understanding the meaning of capital ratios, and bank profitablity. It seems to me that capital requirements stipulate that a certain fraction of banks' risk weighted assets ...
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1answer
139 views

Is there any nation which doesn't have any external debt?

China and the US alone have a staggering 15 trillion dollars in debt. Is there any country which has no external debt and if so, then when did they pay back their debt?
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1answer
2k views

Sequential Game Rollback Equilibria Question

For this question, I believe Albus has 3 strategies: N, E, and S, and Minerva has 8: aaa, aab, aba, abb, baa, bab, bba, and bbb. I've also found the rollback equilibrium to be the case in which Albus ...
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1answer
79 views

What do you call a game that is both simultaneous and sequential?

Is there a standard term for a game that has both simultaneous and sequential parts? Is it a mixed game? A combined game?
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1answer
68 views

how to calculate the average annualized return?

I can do average return, I don't know what is annualized thou. can somebody say where (in a textbook hopefully) can I read about this? thanks!
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1answer
442 views

Taxing a monopoly

can someone explain me why in some books the Demand and marginal revenue moves and but in other books is the marginal cost that moves. Is this like taxing the demand vs taxing the supply? so the ...
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1answer
40 views

What is this graph saying?

This is from: https://eml.berkeley.edu//~dromer/papers/RomerandRomer.pdf What does it mean that we are looking at a "tax increase of 1 % of GDP". What does a tax increase have to do with the GDP? If ...
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1answer
91 views

Decline in the Value of the Domestic Currency

I am using Mishkin's textbook "Economics of Money, Banking and Financial Markets." On the chapter on financial crises, the authors list a number of factors that could trigger a crises. One factor is ...
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1answer
287 views

Did I calculate maximum price of machine correctly?

Problem: A firm wants to buy a machine for its factory. It will work for two years. During the first year it will yield 240 thousand roubles and during the second year it will yield 200 thousands ...
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1answer
196 views

Open market purchase of securities and it's effect on balancesheet

An open market purchase of securities lead to increase in bank reserves ( Liability side) and increase in assets(asset side) of central bank balance sheet. My doubt is why it leads to increase in ...
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1answer
36 views

Normalise historic values given in different currencies

I have historic monetary values given in different currencies and stemming from different points in time. I want to be able to compare them, and for that all must be given in the same currency, and ...
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1answer
23 views

How are fund managers usually compensated against benchmark?

I have heard that fund managers who invest clients' wealth are usually compensated according to how well they perform against a benchmark. What exactly is the (most typical) payoff function for fund ...
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1answer
65 views

How can a crypto currency crash affect liquidity?

To the best of my knowledge, no bank will allow a borrower to provide crypto as collateral for a loan. So, if the price of crypto crashes to zero, there shouldn't be any liquidity issues because no ...
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3answers
231 views

Macroeconomics, the circular flow of income and profits

I'm really confused about the concept of the circular flow of income. Specifically, I'm confused about the following situation: Imagine a simple economy where households don't save their income, so ...
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1answer
51 views

Why is the annual transferred money worldwide quite different?

The source below says "According to this document from the US Treasury, SWIFT handles about \$5 trillion per day, or given about 250 business days per year, about \$1.25 quadrillion dollars a year.". ...
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1answer
97 views

Flat Term Structure and Immunized Portfolio Strategy

The current term structure is flat at 2%. You have a liability of $500,000 per year for the next five years. You decide to form an immunized portfolio. a) Describe your exact strategy if you ...
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1answer
35 views

Real exchange rate of India and United State?

According to OECD the price level of India is 29, and that of united states is 113, and nominal exchange rate is 64-1(INR-$). So what is the real exchange rate? Is it $$RER = NER\times\frac{US_{...
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1answer
73 views

Connection between low demand for US Treasuries and expectation of inflation

The expectations for inflation and fear of accelerated rate hikes on the part of the Fed seem to be driving the stock market correction in the US this February, 2018, and as a result of the jobs ...
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1answer
188 views

The social welfare of a unique general competitive equilibrium in an exchange economy

The first theorem of welfare economics states that "Every Walrasian Equilibrium (WE) is Pareto Efficient (PE)" - Microeconomic Theory Nicholson, Synder 11th ed. p477. But PE is quite a weak condition. ...
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1answer
36 views

Where/What should I search to find the big companies annual paid salary information?

I want to know how much salary paid by apple in 2017 to whole employees. Also the details of other payments of the company(How much they paid for raw materials for example). Also like to know these ...
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1answer
124 views

Ricardian vs Non-Ricardian policy identification

I am reading Sala (2004) and I think I have found a mistake in the paper. On page 7 the author argues that one can differentiate between Ricardian and Non-Ricardian policy regimes by considering ...
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1answer
55 views

How should I define most of the import or export when doing analysis of the import and export of a country?

let's say I'm analyzing the import of France and it is 100 billion dollars and is divide between 200 countries. how should I gauge where has most of the import come from? top 10? 90 percent of the ...
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1answer
40 views

Financial markets, money demands [closed]

How can an increase in the interest rate make bonds more attractive and reduce their price?
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2answers
70 views

Considering how USD enters the market, is the USD actually unbacked? Could the USD represent a unit of a “fund” of securities held by the Fed?

From my understanding, all new money enters the market either 1) by the Fed lending it to banks, so the Fed essentially owns bonds in the exchange, or, 2) The Fed purchasing other financial assets. So ...
0
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1answer
3k views

Monopoly - Where is the Markup formula derived from?

Problem: My lecturer wrote the marginal revenue formula before writing the markup formula, indicating some sort of similarity between the two. How it was written on the board: Market Power ...
0
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1answer
81 views

Increasing returns to scale

Let $f=f(K,L)$ - production function. Let $f(1,2) \le4 $ and a production function is defined to have increasing returns to scale. What maximum product can the firm produce using K=3 and L=6? So we ...
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1answer
329 views

Social planner's first order condition (current-value Lagrangian)

Here is (one of the ways to state) social planner's problem: Eric Sims' notes then immediately gives the solution: I am trying to connect these two lines. This is what I get after taking a ...
0
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1answer
76 views

Why have trickle-down economics failed to trickle down to the middle-class and poor in recent years?

Trickle-down economics, also referred to as trickle-down theory, is an economic theory that advocates reducing taxes on businesses and the wealthy in society as a means to stimulate business ...
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1answer
2k views

GDP versus GNP. Which is a better gauge of a country's economy size and prosperity?

Country A's GDP is larger than Country B's GDP. However, Country B's GNP is larger than Country A's GNP. Which country has a stronger economy? Which country's citizens is more likely to enjoy ...
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2answers
2k views

Does this explanation pertaining to the Supply Curve and Law of Supply make sense?

I was having some trouble understanding the Law of Supply, and I now understand that I was looking at it from the wrong perspective. Now, I'm confused with shifts in the Supply Curve. After reading ...
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1answer
138 views

Variance of $\hat{\beta _0}$ in case of homoskedasticity

Stock and Watson express the variance of $\hat{\beta _0}$ like $\hat{\sigma }^2_\hat{\beta _0}=\frac{E({X_{i}}^{2})}{n\sigma _{X}^{2}}\sigma ^{2}$, but starting from variance of $\hat{\beta _1}=\frac{...
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1answer
233 views

Impulse response functions?

I have a very basic model about a small open economy. This is a summary: $$ E_0\sum_{t=0}^{\infty}\theta_t U(c_t, h_t) $$ utility function: $$ d_t = (1 + r_{t-1})d_{t-1} - y_t + c_t + i_t + \...
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votes
2answers
273 views

Unconstrained Optimization:Why is there no “profit style” function in consumer theory?

When being exposed to your equations for profit maximization you have an equation of: $$\pi=pf(x)-c(x)$$ with this you can solve for the optimal input(s) $x$ from the first order conditions and some ...
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1answer
195 views

Would a sudden increase in population, increase inflation?

Let's say, for the sake of the argument, that the US population grows from 320 millions people to 420 millions overnight, wouldn't that increase inflation? What if in reaction to this, the monetary ...
0
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1answer
99 views

testing the relationship between stock price and macroeconomic variables

I'm in the midst of preparing data to test the relationship between stock index and macroeconomic variables. The variables include m1, cpi, ipi, interest rate, exchange rate. I have some question ...
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1answer
60 views

Why U.S Import from China is a big deal?

Economics books often quotes import as a borrowing Why it is borrowing since the importer pays to exporter for the goods they have received. Lets say, a US company is importing apparel from China.

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