What is the relationship between inflation and interest rates?

July 8, 2024 No Comments

A: Inflation and interest rates are often linked, and frequently referenced in macroeconomics. Inflation refers to the rate at which prices for goods and services rise. In the United States, the interest rate, or the amount charged by lender to a borrower, is based on the federal funds rate that is

What is the relationship between the PPI and the CPI?

July 8, 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 the nation-state in globalization?

July 8, 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 8, 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 utility function and how is it calculated?

July 8, 2024 No Comments

A: In economics, utility function is an important concept that measures preferences over a set of goods and services. Utility is measured in units called utils, which represent the welfare or satisfaction of a consumer from consuming a certain number of goods. Because satisfaction, happiness or

What macroeconomic problems do policy makers most commonly face?

July 8, 2024 No Comments

A: Macroeconomics addresses large-scale economic factors that affect the overall population. Policymakers therefore have to make macroeconomic decisions such as setting interest rates and balancing a country’s inflation with both its trade and the foreign exchange rate. Establishing financial conditions that facilitate an increase in

What major laws regulating financial institutions were created in response to the 2008 financial crisis?

July 8, 2024 No Comments

A: Presidents George W. Bush and Barack Obama signed into law several major legislative responses to the financial crisis of 2008. The most influential and controversial of these was the Dodd-Frank Wall Street Reform and Consumer Protection Act, which introduced a raft of measures designed

What methods can the government use to control inflation?

July 8, 2024 No Comments

A: Inflation occurs when an economy grows due to increased spending. When this happens, prices rise and the currency within the economy is worth less than it was before; the currency essentially won’t buy as much as it would before. When a currency is worth less, its exchange rate

What percentage of the population do you need in a representative sample?

July 8, 2024 No Comments

A: Technically, a representative sample requires only whatever percentage of the statistical population is necessary to replicate as closely as possible the quality or characteristic being studied or analyzed. For example, in a population of 1,000 that is made up of 600 men and 400

What role does a correspondent bank play in an international transaction?

July 8, 2024 No Comments

A: A correspondent bank is most typically used in international buy, sell or money transfer transactions to facilitate foreign currency exchange and payments. What Is a Correspondent Bank? A correspondent bank is a bank in one country that is authorized to provide services for another

All Rights Reserved