Is the retail sector also affected by seasonal factors?

July 7, 2024 No Comments

A: Generally speaking, the retail sector is highly seasonal. Almost invariably, sales in the retail sector are highest in the fourth quarter, or October through December, and peak at Christmas. According to the Census Bureau’s Monthly Retail Trade Report, the most seasonal retail markets are

Is the substitution effect negative for consumers?

July 7, 2024 No Comments

A: The substitution effect is both positive and negative for consumers. It is positive for consumers because it means that they can afford to keep consuming products in a category even if their incomes decline or some products rise in price. It is also negative

Is the United States a Market Economy or a Mixed Economy?

July 7, 2024 No Comments

A: The United States has a mixed economy. It works according to an economic system that features characteristics of both capitalism and socialism. A mixed economic system protects private property and allows a level of economic freedom in the use of capital, but also allows for governments to intervene

Is there a correlation between inflation and house prices?

July 7, 2024 No Comments

A: There is a correlation between inflation and house prices. In fact, there are correlations between inflation and any good with a limited supply. To illustrate, consider an economy that has a money supply of only $10 and five identical houses in the whole economy. Each

Marginal propensity to Consume (MPC) Vs. Save (MPS)

July 7, 2024 No Comments

A: Historically, because people in the United States have shown a higher propensity to consume, this is likely the more important factor than the propensity to save. Consumer demand and consumption drive the U.S. economy. When consumers have a greater amount of extra income, they

Market operation and its effect on Money Supply

July 7, 2024 No Comments

A: The open market operations conducted by the Federal Reserve affect the money supply of an economy through the buying and selling of government securities. When the Federal Reserve purchases government securities on the open market, it increases the reserves of commercial banks and allows them

On what days are the American stock exchanges closed?

July 7, 2024 No Comments

A: Similar to most companies, the major stock markets in North America are open for trading on normal business days only (Monday to Friday, except on holidays). In terms of holidays, both the New York Stock Exchange (NYSE) and the Nasdaq have very similar schedules to

How is productivity calculated?

July 7, 2024 No Comments

A: Productivity measures the efficiency of a company’s production process. It is calculated by dividing the outputs produced by a company by the inputs used in its production process. Common inputs are labor hours, capital and natural resources, while outputs are generally measured in sales

How is profit maximized in a monopolistic market?

July 7, 2024 No Comments

A: In a monopolistic market, there is only one firm that produces a product. There is absolute product differentiation because there is no substitute. One characteristic of a monopolist is that it is a profit maximizer. Since there is no competition in a monopolistic market,

How is the cost of living index calculated?

July 7, 2024 No Comments

A: There is no official cost of living index created or reported by the U.S. government. Unofficial indexes are offered by multiple organizations to track costs of living in different regions. An example is the ACCRA Cost of Living Index (ACCRA COLI), produced by the Council

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