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 to calculate the income effect distinctly from the price effect?

June 30, 2024 No Comments

A: Economists calculate the income effect separately from the price effect by keeping real income constant in the calculation. Normally, one formula is used to calculate the price effect using the income and substitution effects. There are two methods of separating the income and substitution

How to calculate the income effect distinctly from the price effect?

July 7, 2024 No Comments

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

June 30, 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

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

July 7, 2024 No Comments

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

July 7, 2024 No Comments

In economics, what is an index number?

June 30, 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

In economics, what is an index number?

July 7, 2024 No Comments

In economics, what is an index number?

July 7, 2024 No Comments

Is a current account deficit good or bad for the economy?

June 30, 2024 No Comments

A: The current account deficit, also referred to as the “balance of payments deficit” or simply “trade deficit,” represents a fiat currency imbalance between the imports and exports of a country. Whenever the dollar value of tangible consumer goods, such as cars from Sweden or

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