What is the marginal utility of income?

July 7, 2024 No Comments

A: Very simply, the marginal utility of income is the change in human satisfaction resulting from an increase or decrease in an individual’s income. It says that people who get raises tend to be more satisfied than they otherwise would have been, and people who

What is the minimum liquidity coverage ratio that a bank must have from 2016 to 2019 under Basel III?

July 7, 2024 No Comments

A: The minimum liquidity coverage ratio that banks must have under the new Basel III standards are phased in beginning at 70% in 2016 and steadily increasing to 100% by 2019. The year-by-year liquidity coverage ratio requirements for 2016, 2017, 2018 and 2019 are 70%,

What is the point of agricultural subsidies?

July 7, 2024 No Comments

A: Every five years, new legislation is introduced and passed through the U.S. Congress to subsidize farmers and agricultural products. These bills provide benefits such as cash, minimum prices and crop insurance programs. Most academic economists and policy analysts oppose agricultural subsidies, but that seems

What is the purpose of the Volcker Rule?

July 7, 2024 No Comments

A: The Volcker rule limits two main types of activities by large institutional banks. Banks are prohibited from engaging in proprietary trading activities and from owning interest in covered funds, generally defined as hedge funds and private equity funds. The rule is listed in Section

What is the relationship between human capital and economic growth?

July 7, 2024 No Comments

A: Human capital and economic growth have a strong relationship. Human capital affects economic growth and can help to develop an economy through the knowledge and skills of people. Human capital refers to the knowledge, skill sets and motivation people have, which provide economic value.

What is the relationship between the PPI and the CPI?

July 7, 2024 No Comments

A: First, let’s take a look at what these two acronyms mean: the PPI is the producer price index and the CPI is the consumer price index. Both indexes calculate the change in price of a set of goods and services, however there are two

What is the role of deficit spending in fiscal policy?

July 7, 2024 No Comments

A: As a part of its fiscal policy, a government sometimes engages in deficit spending to stimulate aggregate demand in an economy. However, the two are separate terms that need not necessarily overlap. Not all deficit spending is performed as part of fiscal policy, and

What is the role of the nation-state in globalization?

July 7, 2024 No Comments

A: The role of the nation-state in globalization is a complex one in part due to the varying definitions and shifting concepts of globalization. While it has been defined in many ways, globalization is generally recognized as the fading or complete disappearance of economic, social

What is the theory of asymmetric information in economics?

July 7, 2024 No Comments

A: The theory of asymmetric information was developed in the 1970s and 1980s as a plausible explanation for common phenomena that mainstream general equilibrium economics couldn’t explain. In simple terms, the theory proposes that an imbalance of information between buyers and sellers can lead to

What is the difference between moral hazard and morale hazard?

July 7, 2024 No Comments

A: Morale hazard is an insurance term used to describe an insured person’s attitude about his belongings. It arises when the person does not care about his possessions because he knows he is insured. For example, suppose a person pays insurance for his new phone.

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