How successful have “dove” Federal Reserve heads been in the past when it comes to managing the economy?

July 7, 2024 No Comments

A: Until the financial crisis of 2007-2008, it seemed as though dovish chairs of the Federal Reserve had used monetary policy to effectively keep down unemployment without noticeable negative consequences. The “Great Moderation” ushered in by Alan Greenspan was an enormous success story, until the

How is marginal analysis used in making a managerial decision?

July 7, 2024 No Comments

A: Marginal analysis plays a crucial role in managerial economics, the study and application of economic concepts, to managerial decisions. The idea is to predict and measure the impact of per unit changes on an organization’s goals, ultimately identifying the optimal resource allocation given the

If left in place long term, what problems does protectionism cause for a country?

July 7, 2024 No Comments

A: In 1886, American free-trade advocate Henry George famously identified the problem of protectionism through an amusing analogy: “What protection teaches us, is to do to ourselves in time of peace what enemies seek to do to us in time of war.” George poignantly identified

How is marginal revenue related to the marginal cost of production?

July 7, 2024 No Comments

A: The marginal cost of production and marginal revenue are economic measures used to determine the amount of output and the price per unit of a product that will maximize profits. A rational company always seeks to maximize its profit, and the relationship between marginal revenue

In economics, what is an index number?

July 7, 2024 No Comments

A: Economists often make comparisons between sets of data across time. For example, a macroeconomist might want to measure changes in the cost of living in the United States over a five-year period. This is where index numbers come in; they allow for easy, quick

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

How is the stock market affected by Thanksgiving and Black Friday?

July 7, 2024 No Comments

A: Black Friday – the name given to the first day after Thanksgiving – is one of the most important retail and spending events in the United States. Every holiday season, prognosticators make predictions about the level of sales on Black Friday, and investor confidence

How many multinational corporations operate in China?

July 7, 2024 No Comments

A: A very large group of multinational corporations operate in China, both Western and otherwise. China is one of the world’s fastest-growing economies, and its inhabitants make up almost 20% of the world’s population. Since its adoption of free-market principles, China has become one of

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