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Since their inception, VAR models have been at the centre of many controversies associated with econometric modelling. The recurring criticism throughout history is due to the mode
How can we define the real wage as nominal wage We define real wage as nominal wage divided by a price index (typically CPI). In the illustration above, your real wage was 20 i
Should the government increase, decrease or remain the same in its level of intervention when it comes to mandating that companies provide product information to consumers? What ha
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
Q. What is Investment demand? Investment demand Investment I(r) is assumed to be negatively related to the real interest rate r Total dema
the uses of production function
what is the difference between demand and supply?
Stocks and Flows When studying economics, one must be sure whether the variable being studied is a stock variable or a flow variable. Failure to do so can cause faulty economi
Compare Money with wealth and income Money isn't the same as wealth. An individual may be very wealthy however have no money (for instance by owning stocks and real estate). An
Mathematical Presentation: Consider the utility function U = U(x 1 , x 2 ). Differentiating totally, we get the following: dU = U 1 dx 1 + U 2 dx 2 = 0 (as along the indiffe
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