4

Why have M3 not followed the same quantitive expansion as M1? Because commercial banks have used injected liquidities to "consolidate" their balance sheet instead of credit-stimulating demands. What I mean by "consolidate" is that the subprime crisis and its consequences have contaminated the Euro-zone's commercial banks through securitization, ...


4

As you point out, central banks have "printed" a considerable amount of money since the 2008 crisis. The following chart of the US monetary base is one of clearest examples of this phenomenon. The metric you seem to be pointing out through your question is known as the money multiplier: the ratio of broad money (e.g., M1, M2, or MZM) to the monetary base. ...


4

That statement is not generally true. It is true of rivalrous goods (e.g. when I take a slice of a pizza, there's that much less left of the pizza for you). It is false of non-rivalrous goods (e.g. when I step into the sunshine, there is usually* no less of the sunshine for you). *Unless of course I somehow also block the sunshine for you.


4

Opportunity cost is simply the value not obtained of the highest value alternative. It can be positive or negative; meaning it doesn't really make sense to define the opposite as opportunity profit. There is only two ways to go about it rationally, either you are profiting from doing something, or you are not profiting by not doing something, which is ...


3

I have to disagree with the previous answer. There is quite a large literature on international trade and the effect of environmental regulations. To start off there is the whole race to the bottom literature and the environmental Kuznet's curve. A good start of trade versus the environment is given in Esty's 2001 Bridging the Trade-Environment Divide (found ...


3

Most papers I have read in the JPE circulated in form of preprint before (not on arxiv, but this should not be an important point). See for instance https://ideas.repec.org if you want to find examples of working papers later published in JPE: But it is probably better to read the journal's policy before submission.


3

For starters, I've confirmed your results for the United States using data from federalreserve.gov and alfred.stlouisfed.org: If we take a look at the breakdown of bills in circulation, we can see that the value of $100 bill has drastically increased relative to the total value of bills in circulation but the others bills have not. So people are indeed ...


2

I believe this comes from a very beginning of the book, which tries to emphasize the concept of scarcity... a very important idea in economics. Later on, you'll see that there are certain types of goods that, when one person "consumes" it, it doesn't mean that other people cannot consume it as well. In economics, this is called a non-rivalry good. Some ...


2

First off some terminology: opportunity cost are not necessarily avoided profit. Profit is a term that is used for firms, but opportunity cost does not just apply to firms. Moreover as @clinical coder points out the opportunity costs are not avoided profits but the value of the best alternative forgone. For certain firm decisions that may be forgone profit, ...


2

If we are talking about a government indulging in printing their own US currency then there are two issues with it: For any large scale purchase or buying, they use marked currency of a certain series. Say, a country wanted to buy a few fighter jets or crude oil worth a few hundred millions then the recipient country would not only ask for marked currency ...


2

Fractional banking acts as a multiplier on the money available for loan takers. Actually, this is subsequently to having taken loans that the money multiplier increases from 1. Fractional banking potentially increases the "money supply", it does not do so performatively. Incidentally this is even why, western economists are currently discussing the ...


2

First, note that the growth rate of $\mu$ is defined as $\dot\mu = \frac{ d\mu }{ \mu }$. Therefore, you will have to take the total differential of the equation; and divide by $\mu$. For the first step, as in your previous question, simply use the rules of total differentials, specifically the product rule that states that for variables $X$ and $Y$, the ...


2

For a variable $X$, let $dX$ denote its total differential. Let $k$ be a constant, and $X$ and $Y$ variables. You'll need the following rules: $$dk = 0$$ (constant rule), $$d(X + Y) = dX + dY$$ (sum rule), $$d(XY) = Y \cdot dX + X \cdot dY$$ (product rule) and $$d\left(\frac{X}{Y}\right) = \frac{ Y \cdot dX - X \cdot dY }{ Y^2 }$$ (quotient rule). ...


2

Perhaps you are confusing bond prices with yields? When bond prices go up, payments relative to the price the bonds are purchased will go down, and thus by definition yields go down. The Fed mainly controls rates through open market operations, and more recently quantitative easing. In short, when attempting to cut rates, the Fed purchases securities such ...


2

What you suggest can easily be rationalised, if those on fixed incomes (such as pensioners) tend to be poorer while those with economically sensitive incomes (such as workers and shareholders) tend to be richer and see their incomes more adversely affected by recessions. But I am not convinced it is true in every case. The UK recession in 1980 may be an ...


1

I don't know much about repo markets, but in dynamic systems in general, two things are likely to generate volatility: Large shocks of any kind, corrective or not, especially when they are reactive (and therefore delayed and possibly out of phase with underlying cycles - think about pushing a child on a swing while standing at the edge, versus standing in ...


1

Rule of thumb: if the changed quantity does not appear on an axis of the graph, its effect (if any) will be a shift of the curve, rather than movement along the curve. For example, an AD-AS graph has price and quantity on the axes. Interest rate does not appear on the axes, so an increase in the interest rate (say) could be associated with a decrease in the ...


1

That is correct. \$50 would be counted towards consumption, and the rest would be counted as investment (inventory).


1

Not sure what level of answer you're expecting, but here's an intuition. In equilibrium, countries should have balanced trade. That is, imports equals to exports. If a country consistently exports more than it imports, the demand for its currency should make the currency appreciate (relative to other currencies). The country's currency would appreciate ...


1

The word "distortion", (as used in e.g. the Ramsey–Boiteux pricing), is not intrinsically negative. It simply means that people change their consumption behaviour because of changes in price(s). For example, a tax on oxygen would not (and cannot) be distortive because people have no choice but consuming oxygen. A contrario, a tax on tabacco is distortive,...


1

It depends upon the circumstances and isn't necessarily bad. Suppose a foreign firm A buys a British company from its current British owner B. A is gaining the right to whatever stream of profits the company may make in future. B is gaining the price paid for the company by A. Whether that is a good deal for B will depend upon various considerations ...


1

As mentioned by @Henry: investment is itself a demand for capital goods (physical, human, etc.). If I decide to buy trucks this manifests itself as an increase in demand to the truck factory.


1

I think a lot of people here gave some really good answers, including the person who got some downvotes. 240% debt-to-GDP ratio is based on a mathematical calculation. For example, currently here in the United States, we have a 105% debt-to-GDP ratio ($22Trillion ÷ $21Trillion = 1.05) That is the calculation used to arrive at that 240% you speak of. Both ...


1

In the present legal environment it's not possible for a country to exit just the Eurozone voluntarily, by itself. The only sure way is the complicated scenario in which a country would leave the EU and rejoin it without rejoining the Eurozone; it is so far out there that I doubt you can find any serious economic analysis of it. A few other scenarios have ...


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