What exactly is being done when shares are bought and sold?

July 7, 2024 No Comments

A: Most stocks are traded on physical or virtual exchanges. The New York Stock Exchange (NYSE), for example, is a physical exchange where some trades are placed manually on a trading floor (other trading activity is conducted electronically). NASDAQ, on the other hand, is a

What Factors Cause Shifts in Aggregate Demand?

July 7, 2024 No Comments

A: Aggregate demand (AD) is defined as the total amount of goods and services consumers are willing to purchase in a given economy and during a certain period. Sometimes aggregate demand changes in a way that alters its relationship with aggregate supply (AS); this is

What factors influence a change in demand elasticity?

July 7, 2024 No Comments

A: Demand elasticity is the sensitivity of the demand for a good or service due to a change in another factor. There are many factors that influence a change in demand elasticity. These factors include price, income level and availability of substitutes. Price One factor

What factors influence a change in supply elasticity?

July 7, 2024 No Comments

A: The elasticity of supply measures the percentage change in supply due to a change in another factor. It refers to how the amount supplied of a good or service changes in response to a price or factor change. There are several factors that affect the

What factors influence competition in microeconomics?

July 7, 2024 No Comments

A: From a microeconomics perspective, competition can be influenced by five basic factors: product features, the number of sellers, barriers to entry, information availability and location. These factors hinge on the availability or attractiveness of substitutes. Product features essentially describe the level of differentiation. If

What goods and services do command economies produce?

July 7, 2024 No Comments

A: A command economy is an economic system in which the government, or the central planner, determines what goods and services should be produced, the supply that should be produced, and the price of goods and services. Some examples of countries that have command economies

What happens if the Federal Reserve lowers the reserve ratio?

July 7, 2024 No Comments

A: If the Federal Reserve decides to lower the reserve ratio through an expansionary monetary policy, commercial banks are required to hold less cash on hand and are able to increase the amount of loans to give consumers and businesses. This increases the money supply,

What happens to the US dollar during a trade deficit?

July 8, 2024 No Comments

A: During a trade deficit, the U.S. dollar generally weakens. Of course, there are numerous inputs that determine currency movements in addition to balance of payments, including economic growth, interest rates, inflation and government policies. A trade deficit is a negative headwind for the U.S.

What happens when inflation and unemployment are positively correlated?

July 7, 2024 No Comments

A: Positive correlation between inflation and unemployment creates a unique set of challenges for fiscal policymakers. Policies that are effective at boosting economic output and bringing down unemployment tend to exacerbate inflation, while policies that rein in inflation frequently constrain the economy and worsen unemployment.

What happens when M2 money supply grows faster than the overall economy?

July 7, 2024 No Comments

A: Generally speaking, inflation occurs if M2 money supply expands faster than the rate of productive growth in the overall economy. This means prices are higher than they otherwise would have been. It’s important to distinguish between certain components of M2, however. Cash and checking

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