Most Popular
1500 questions
29
votes
6 answers
Why is a stock market crash so bad?
Many folks speak about potential stock market crashes when central banks raise interest rates. I am not a graduate economist nor do I pretend to understand it, but I am definitely curious about what's happening because it affects me. I have two…
Hairi
- 425
- 4
- 8
29
votes
4 answers
Why do people buy negative interest rate bonds?
I get that people buy long term government bonds, because of how safe it is, and if there would be a recession the government would just print more money and could pay it back.
But why would anyone buy a bond, that yields a negative return? If i…
curiousTrader
- 608
- 5
- 9
28
votes
10 answers
People pathologically hoard so much cash that they impoverish the entire nation
"If a man has an apartment stacked to the ceiling with newspapers we
call him crazy. If a woman has a trailer house full of cats we call
her nuts. But when people pathologically hoard so much cash that they
impoverish the entire nation, we…
Bob L.
- 297
- 1
- 3
- 4
27
votes
1 answer
How do Gini coefficients correlate with the cost of higher education?
Are there any studies that explore the higher net present value (NPV) of education in countries with higher Gini coefficients?
Additionally, do any of these studies include the impacts of economic mobility as a reducing factor of the NPV or price of…
Jason Nichols
- 3,555
- 1
- 18
- 38
27
votes
9 answers
What's wrong with the "airline marginal cost pricing" argument?
This is a very common argument found in introductory classes and texts. Here's Mankiw's version:
Thinking at the margin works for business decisions as well. Consider an airline deciding how much to charge passengers who fly standby. Suppose that…
user23102
27
votes
13 answers
Why do banks take deposits if they do not need them to make loans?
I have taken some economics courses in university, where I was introduced to fractional-reserve banking. From my understanding, in fractional-reserve banking, the bank has motivation to encourage deposits from depositors, because a large part of…
Flux
- 553
- 1
- 4
- 14
26
votes
4 answers
Partial vs. general equilibrium
Microeconomic models are usually classified as partial and general equilibrium models. As a layman, I understand that partial equilibrium focuses attention on a few economic variables to find the equilibrium, while general eq. models capture a…
Bravo
- 1,699
- 3
- 15
- 22
26
votes
5 answers
Why is the spot price of electricity determined by the highest price that gets offered? Can't they scale it according to the actually offered prices?
most energy markets work using "spot markets", where everyone puts in an offer for how much electricity they can provide and at what price, and then everyone gets paid the highest price based on what's used. With the current excessively high prices…
Nzall
- 373
- 3
- 5
26
votes
4 answers
Could eliminating all taxes and only creating new money theoretically work?
Imagine you had the opportunity to found a new country from scratch (in 2020).
Value exchange would be digital, where only the state can create new currency units.
Instead of relying on income tax and/or indirect taxes, there would be no form of…
Nico
- 369
- 3
- 6
26
votes
10 answers
What are examples for the phenomenon that more (or better) information makes everybody worse off?
More information is usually considered "better". Let's say a rational agent chooses optimally given his information on the circumstances of a particular decision problem. Then providing him with more or better information makes him (weakly) better…
VARulle
- 6,805
- 10
- 25
26
votes
4 answers
How can power/electricity prices be negative?
Bloomberg shows this chart:
I understand the above chart to mean that consumers were actually paid to use electricity. (Please correct me if I'm mistaken.)
I was wondering how this is possible? How is the power/electricity market special and…
user18
25
votes
2 answers
Should we expect more structural technological unemployment if growth becomes more limited by natural resources and less by labour?
Technological unemployment, where unemployment arises from (with some oversimplification) workers being replaced by machines, has so far been temporary as new jobs were created that replaced the old jobs. Structural unemployment has been predicted…
gerrit
- 1,754
- 11
- 26
25
votes
4 answers
What are FOCs and SOCs?
I keep seeing the terms first-order conditions and second-order conditions used in my undergrad economics class on production functions, monopolies, etc but I have no idea what these terms mean. It seems like a completely ambiguous term. What kind…
Stan Shunpike
- 3,454
- 12
- 34
- 57
24
votes
7 answers
How does Black Friday work?
On days like Black Friday, everyone rushes out expecting huge savings on everything they buy. The level of demand seems to reach ludicrous levels, and one would expect smart merchants to react by increasing all of their prices in response to…
JSideris
- 497
- 1
- 5
- 12
24
votes
3 answers
When Optimal Control fails (?)
In order to "ask my question", I have to solve a model first. I will omit some steps but still, this will unavoidably make this post very long -so this is also a test to see whether this community likes such kind of questions.
Before starting, I…
Alecos Papadopoulos
- 33,814
- 1
- 48
- 116