Demand Theory – Consumer Choice Problem

Normal, Inferior, Neutral, Luxury, Necessary Goods There are three fundamental questions about a consumer’s consumption response: 1. How will demand change for a good i change in response to a increase or decrease in the price of i? 2. How will demand for good i...

Introduction to Macroeconomics – Some key terms

Economics: The Study of how society deals with scarcity. Here is a brief article on the introductory components of any economy with a macroeconomic slant. In the economy we expect to find these four components: resource endowment, technology, preference, institutions....

Government Buying It’s Own Bonds?

Not that they can’t, but why would it be bad policy to raise government revenues by issuing bonds that are then sold to the monetary authority? Here are some thoughts in relation to a fixed exchange system and a floating exchange rate system. There is an...
Explaining Clearing Drains and Currency Drains

Explaining Clearing Drains and Currency Drains

Here is a brief explanation on the nature of clearing drains and currency drains. The applications include part of how banks lend and settle account between each other. Put yourself into a context of the major banks and how they move their money between each other and...

The Impact of Different Interest Rates

Here is a brief example that explain the impact of interest rates. We’ll assume two periods for simplicity sake. Period 1 (Year 1) will be the CURRENT period, and Period 2 (Year 2) will be the FUTURE period. Other notes for this example: A consumer who earns...

National Income Accounting in an Open Economy

This article continues on from a previous entry in our macroeconomic blog category called Balance of Payments explained. This article provides an example of the national income accounting scheme in action within an open economy. Comments are always welcome. Remember...

Print Book Industry Relies on Coloring

If you’ve ever taken Econ 101 then you’ll recall in the first-class this simple principle. The entire economic system relies on the foundation of supply and demand. This in turn produces scarcity. The more scare a product or service, the higher the price...