1 Comment
/
Apr 21.13
/
Microeconomics
/ by Ro Econ
Competitive Behaviour vs. Competitive Market Structure
Here are some key terms to begin discussing and understanding competitive behaviors and market structures. Competitive behaviour is the degree to which individual firms compete against each other to gain higher market shares, earn higher profits, etc. It is also the manner in which firms compete against each other (advertising, pricing policies, customer service, etc.)
Continue reading this article »
No Comments
/
Apr 14.13
/
Investments
/ by Ro Econ
We just finished five classifications of capital markets, so why not the financial markets as well?. Here is a list of the seven different classifications you’ll find in the financial markets.
1) Debt vs. Equity Markets
- Legal obligation vs.
- Ownership position in the business
2) Primary vs. Secondary
- New issues vs.
- Previously issued securities
Continue reading this article »
No Comments
/
Apr 10.13
/
Macroeconomics
/ by Ro Econ
Quantity Theory of Money and Real Wage
In a classical model, increasing the money stock leads to an increase in the price level, however, real wages are not affected. Why is that? Well, the quantity theory of money holds in the long run due to the following reason. The long run aggregate supply curve (classical model) is; y = (k, N). We know that k (capital) is fixed and the labour market is in equilibrium. The long run aggregate supply curve solely depends on the labour market from the above mathematical equation.
When the central bank increases the nominal money stock as expansionary monetary policy, price levels go up in the short run. In the labour market wage will immediately clear the market. Explained: Continue reading this article »
No Comments
/
Feb 28.13
/
Personal Finances
/ by financewriter
Have you ever had that feeling of being overwhelmed when looking at a buffet of 100 items with all the choices available to eat and enjoy? Ever walked out of a buffet restaurant with a slight case of upset stomach?
Well it can happen in more than the food realm.
Although the worldwide web has increased availability of information and in some cases led to a democratization of specialized knowledge it has also caused society to be hooked on new information at the speed of LTE! There are more ways to connect and we are always tuned in.
Has the digital high speed era helped people become more financially successful? Media competition has certainly contributed to the amount of information. But is what we hear about the stock market and financial sphere beneficial to us? Should we let this never ending stream of news influence how we manage our personal finances?
Continue reading this article »
No Comments
/
Feb 22.13
/
Personal Finances
/ by Ro Econ
It’s RRSP season and there are only a couple of weeks left to invest some cash to reduce your taxable income for 2012. Many people are looking for advice on how to spend any extra funds. With the rush to invest prior to the March 31st deadline (in Canada), more than a slew of advice hits the fan. Some of it’s good, some of it quite bad. The question is, what’s good for you?
Continue reading this article »
No Comments
/
Feb 07.13
/
Finance
/ by Ro Econ
NPV, IRR, Cash Flow, and Project Evaluation Tools and Methods
We have written a few key articles on the area of cash flow analysis here at DiscussEconomics. This article will give you a quick summary of each article and correlating link for easy review of each topic. Feel free to book mark and link to this page.
1 Comment
/
Jan 15.13
/
Macroeconomics
/ by Ro Econ
Little did we know that in 1999 current economists and policy makers were seeing into a future 2013 when the mighty American economy would be brought to its knees from its own insatiable appetite for corporate profits and the solution to escape the debt riddled debacle, and the clutches of stubborn House Republicans, would be to mint a Trillion dollar platinum coin.
I kid you not. Some even thought it to be a viable last option. The Fed has since dismissed the rumors as nothing short of fanciful fairytales, but still, one has to think what we’re coming to when The Simpson’s contribute to solid economic policy.
Here are some more links on the discussion:
Continue reading this article »
3 Comments
/
Jan 14.13
/
Macroeconomics
/ by Ro Econ
A number of people and students wonder about the relationship between inflation rate movements and the quarterly interest rate (nominal and real interest rate). Here are observations based on Canadian data over a 50 years period that tracks T-Bill interest rate, consumer price index, and real interest rate.
Continue reading this article »
28 Comments
/
Dec 21.12
/
Microeconomics
/ by Ro Econ
Here is a list of some of basic microeconomics formulas pertaining to revenues and costs of a firm. Remember when you’re using these formulas there are a variety of assumptions, namely, that the the firm is profit-maximizing (making as much money as they can.)
Here are total cost formulas, average variable, marginal cost, and more, (work out your own algebra to find alternatives):
Continue reading this article »
97 Comments
/
Dec 18.12
/
Banking
/ by Ro Econ
Do Banks Create New Money out of Thin Air?
**Re-posted after the events of the credit crunch and 700 bailout packages, enjoy the read and learn how the banks got themselves in this mess.**
Here’s the story. Banks keep on lending money, but where do they get it from? Do they borrow from bigger banks who borrow from bigger banks who borrow from the central bank who then prints the money? Is it as simple as just printing more money?
Turns out money creation sometimes appears out of thin air. All banks lend based on a reserve ratio of their deposit: they must keep a certain % of each deposit at the bank but can lend out the rest. Of course, the whole system is dependent on a) the bank being responsible with lending, b) everyone not defaulting on their loans. If these two things happen eventually the system faces massive losses which is what we’re seeing in the current market.
Let’s observe a fictitious situation to help us understand how the bank gets or ‘creates’ their money. Note: when the term ‘bank’ is used in this article it will refer to your bank and not the central bank (Federal Reserve for the US.)
Continue reading this article »
