Tag Archives: economy

What are the different markets in economics?

My answer on Quora: A market is for anything that has someone who wants something and someone who provides it. Or, where a transaction takes place. A stock market is where people buy (want) and sell (provide) stocks. Stocks are bought and sold in different “exchanges”, like the New York Stock Exchange, Nasdaq, or the Bombay Stock […]

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Can pessimism on the economy actually help trigger an economic decline?

My post on Quora: More broadly, expectations can play an important role in economic decisions and can sometimes be self-fulling. Economic Decisions and Expectations From the demand side, an economy can be thought of as a series of spending, saving, borrowing and investment decisions by people, companies, investors, national governments, city councils, etc. These decisions can be […]

Why is the employment-to-population ratio still low despite the very low unemployment rate in the U.S.?

My answer on Quora: This is one of the biggest labor market questions and challenges in the U.S. economy. The straight answer is that the labor force participation rate sharply declined for years after the 2008 financial crisis before finally stabilizing in 2016. The real question is why fewer people are participating in the labor force. An […]

Will the world eventually come to an equilibrium where all nations will be developed and everyone will be out of poverty?

My answer on Quora: In the United States, the preamble to the nation’s constitution begins with “We the people of the United States, in order to form a more perfect union…” The idea of “a more perfect union” underpins the ultimate goal of the nation as defined from its inception: to become more perfect with every generation, […]

What is the benchmark used to measure the effectiveness of monetary policy?

My answer on Quora: There are different indicators one can look at to help assess if the monetary policy of a central bank is effective or not, but such assessments have been getting harder to make. On the surface On the surface, a central bank can be viewed as effective in its monetary policy if […]

Comment: On the Fed engaging with the public

Gillian Tett of the Financial Times recently posed this question in an opinion piece: “How should the Federal Reserve engage with the public?” Soon after becoming chairman of the Fed, Jerome Powell did something no other Fed chairperson (or perhaps any major central bank governor) has done before. He posted a video where he speaks […]

Why do people have such strong political opinions about economic issues? If we knew what works economically, why wouldn’t all people already support that?

My answer on Quora: Two key points stand out to me on this issue. The first is on what we know about the economy. The second is on how we talk about the economy. We do know a lot about the economy, but we don’t always know what the best way forward is. This is […]

How does improving basic infrastructure enhance economic growth?

My answer on Quora: Basic infrastructure enhances economic growth in three broad ways: (1) by supporting the production of goods and services, (2) by connecting people to each other and to those goods and services, and (3) by helping people secure basic needs like food, clean water, housing, health care and quality education (a healthy […]

What is the optimal home ownership rate in the US?

My answer on Quora: I think this question just gave some economist out there an idea for her next paper, because, to my limited knowledge on this literature, there do not seem to be many studies that try to answer this question. There may be a reason for that and that reason could be methodological […]

What are economic structural factors?

My answer on Quora: The structural factors of an economy are those that do not change with the economic cycle. There are structural factors and there are cyclical factors. Think of a trend vs. variations around that trend. Structural factors relate to the supply-side of the economy and cyclical factors relate to the demand-side. Structural factors include laws (like […]

How can innovation help improve the economy?

My answer on Quora: The kind of innovation that helps improve the economy could do so by improving the efficiency of production, the quality of goods and services, and the availability (access) of goods and services. Before saying a quick word about those three areas, it is important to note that innovation by itself is […]

What is the difference between ‘economics’ and the ‘economy’?

My answer on Quora: The economy can be thought of as a system of production and exchange of goods and services among people and organizations (private or public). The money, price and financial system are there to facilitate production and exchange, and provide a common unit of value to different goods and services. Traditionally, economics […]

How will the economy survive automation?

My answer on Quora: This is the question of our time, and of past times as well. I do not have an answer for our time, but the 20th century has an answer for the last time this question dominated society – at the onset of the industrial revolutions of the 18th century (in the […]

Which is better, GDP or HDI?

“In my opinion the point of high GDP is to provide better life for people. That’s higher GDP should lead to Higher HDI, otherwise it is not real development. What is your view?” My answer on Quora: It does not strictly follow that higher GDP leads to higher HDI (Human Development Index). GDP is a […]

Is the Chinese economy sustainable?

My answer on Quora: As it stands right now, China’s economy is not sustainable. The good news is that the Chinese authorities know what they need to do. The bad news is that it is a lot easier said than done, not just for political reasons but for economic ones too. At the heart of […]