Review of Microeconomics
... absolute value of the price ratio. Thus, at the optimal point, the rate at which the consumer is willing to exchange one good for the other in order to maintain the same level of well-being (or utility) exactly equals the rate at which he can exchange them while keeping the same level of expenditure ...
... absolute value of the price ratio. Thus, at the optimal point, the rate at which the consumer is willing to exchange one good for the other in order to maintain the same level of well-being (or utility) exactly equals the rate at which he can exchange them while keeping the same level of expenditure ...
Microeconomics - WordPress.com
... determined by the nature of the product and the market structure in which they operate. • In perfect competition firms produce a homogeneous product and are price-takers in their output markets. • All profit-maximising firms choose their output to equate marginal cost and marginal revenue. • Under p ...
... determined by the nature of the product and the market structure in which they operate. • In perfect competition firms produce a homogeneous product and are price-takers in their output markets. • All profit-maximising firms choose their output to equate marginal cost and marginal revenue. • Under p ...
Should Monetary Policy "Lean or Clean"?
... all shared these characteristics3, as did the more recent Nordic, Japanese and South East Asia crises4. Moreover, in each instance the crisis emerged suddenly and unexpectedly, and without any significant degree of accelerating inflation beforehand. There is a great deal of evidence to support the v ...
... all shared these characteristics3, as did the more recent Nordic, Japanese and South East Asia crises4. Moreover, in each instance the crisis emerged suddenly and unexpectedly, and without any significant degree of accelerating inflation beforehand. There is a great deal of evidence to support the v ...
Competitive Equilibrium
... consequence, new firms and new capital will be attracted to the industry. If economic profits are negative, then stockholders receive less than they had expected and to the extent possible capital will move out of the industry. ...
... consequence, new firms and new capital will be attracted to the industry. If economic profits are negative, then stockholders receive less than they had expected and to the extent possible capital will move out of the industry. ...
Yield Curve Inversions and Future Economic Growth.
... debate as to whether this has had a large impact on bond prices. In addition, this buying has flattened out recently. A recent Fed study estimated that the foreign buying pushed yields down by 150bp. ...
... debate as to whether this has had a large impact on bond prices. In addition, this buying has flattened out recently. A recent Fed study estimated that the foreign buying pushed yields down by 150bp. ...
Lesson 14 – How are Stock Prices Determined?
... • People are more likely to sell stock in a given company if they have negative expectations regarding the success of that company. They might expect: ■ The stock price to decrease in response to changes in the industry, world events, or other uncertainties. ■ The dividend to decrease. ■ Better oppo ...
... • People are more likely to sell stock in a given company if they have negative expectations regarding the success of that company. They might expect: ■ The stock price to decrease in response to changes in the industry, world events, or other uncertainties. ■ The dividend to decrease. ■ Better oppo ...
PowerPoint
... prices of inputs change, the level of production often changes. Generally, producers try to sell products for at least as much as the total cost of all the inputs. ...
... prices of inputs change, the level of production often changes. Generally, producers try to sell products for at least as much as the total cost of all the inputs. ...
Technological Change and Dynamic Equilibrium
... equilibrium and price competition? Perhaps the application of advanced mathematical methods that was launched by Samuelson (1947) could proceed more easily in the analysis of static equilibrium under perfect competition. On the macroeconomic side, vivid memories of the Great Depression combined with ...
... equilibrium and price competition? Perhaps the application of advanced mathematical methods that was launched by Samuelson (1947) could proceed more easily in the analysis of static equilibrium under perfect competition. On the macroeconomic side, vivid memories of the Great Depression combined with ...
The Neoclassical Growth Model
... From the 1950s until the late 1980s, the theory of economic growth was a stagnant area for economic research. All of this changed for two reasons: 1. The Penn World Table. 2. A comprehensive source of data. ...
... From the 1950s until the late 1980s, the theory of economic growth was a stagnant area for economic research. All of this changed for two reasons: 1. The Penn World Table. 2. A comprehensive source of data. ...
History of macroeconomic thought
Macroeconomic theory has its origins in the study of business cycles and monetary theory. In general, early theorists believed monetary factors could not have an impact on real factors such as real output. John Maynard Keynes attacked some of these ""classical"" theories and produced a general theory that described the whole economy in terms of aggregates rather than individual, microeconomic parts. Attempting to explain unemployment and recessions, he noticed the tendency for people and businesses to hoard cash and avoid investment during a recession. He argued that this invalidated the assumptions of classical economists who thought that markets always clear, leaving no surplus of goods and no willing labor left idle. The word macroeconomics was first used by Ragnar FrischThe generation of economists that followed Keynes synthesized his theory with neoclassical microeconomics to form the neoclassical synthesis. Although Keynesian theory originally omitted an explanation of price levels and inflation, later Keynesians adopted the Phillips curve to model price-level changes. Some Keynesians opposed the synthesis method of combining Keynes's theory with an equilibrium system and advocated disequilibrium models instead. Monetarists, led by Milton Friedman, adopted some Keynesian ideas, such as the importance of the demand for money, but argued that Keynesians ignored the role of money supply in inflation. Robert Lucas and other new classical macroeconomists criticized Keynesian models that did not work under rational expectations. Lucas also argued that Keynesian empirical models would not be as stable as models based on microeconomic foundations.The new classical school culminated in real business cycle theory (RBC). Like early classical economic models, RBC models assumed that markets clear and that business cycles are driven by changes in technology and supply, not demand. New Keynesians tried to address many of the criticisms leveled by Lucas and other new classical economists against Neo-Keynesians. New Keynesians adopted rational expectations and built models with microfoundations of sticky prices that suggested recessions could still be explained by demand factors because rigidities stop prices from falling to a market-clearing level, leaving a surplus of goods and labor. The new neoclassical synthesis combined elements of both new classical and new Keynesian macroeconomics into a consensus. Other economists avoided the new classical and new Keynesian debate on short-term dynamics and developed the new growth theories of long-run economic growth. The Great Recession led to a retrospective on the state of the field and some popular attention turned toward heterodox economics.