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Despite the economic progress that the U.S. has observed in the past century, the standard of living remains extremely low in many countries. Why are some countries relatively weal
Suppose home cost pricing prevails in international trade, while world output is declining. Consider two economies, A and B, both having floating exchange rates and the same moneta
Norms influence behavior conformity among group members. What factors will influence group members to conform to a group's norms, and when will members remain independent? Do indiv
An economy's IS and LM curves are given by the following equations: with Y indicating output (income), c indicating the marginal propensity to consume, I investment, G gove
The following Table summarizes the profits of two firms as a function of their capacity investments levels (you can also interpret these levels as the quantities they produce):
How does an increase in income affect a consumer's budget line and their total utility?
Now we will analyse how macroeconomic variables fit together and present models which explain the main macroeconomic variables. Using these models we can, for instance, analyse
Index number formulas
In a survey of 120 publicly-traded companies, the average price-earnings ratio was 18.5 with a standard deviation of 8.2. When testing the hypothesis (at the 5% level of significan
Overnight target rates and inflation One of the major targets of every central bank is a low and stable inflation. Its main control variable is the overnight interest rate tar
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