Conservapedia - User contributions [en]

Ben Green

2012-01-23T13:58:40Z

MPeters: Created article

'''Ben Green''' is a British mathematician. Best known for his work in [[number theory]] and [[combinatorics]], Green is the recipient of the 2010 [[ConservaMath Medal]].

Green teaches [[pure mathematics]] at the [[University of Cambridge]].

ConservaMath Medal

2012-01-23T13:56:41Z

MPeters: Linked Ben Green

The '''ConservaMath Medal''' is the merit-based alternative to the [[Fields Medal]], with winners announced at the same time so that real achievement is recognized.

Deserving recipients should have solved a real, longstanding problem, rather than solving an invented problem.

== Nominees Based on Merit ==

[[Ben Green]] apparently earned this award four years ago when it was given for an achievement he helped obtain, but giving the [[Fields Medal]] to him now might dim the star of [[Obama]]-supporter Terence Tao, making Tao less effective politically.

== Likely Winners Based on Politics ==

This award has never actually been given, leading one to believe that it is simply one of Andrew Schlafly's "pet projects" that he lost interest in 5 seconds later. In other words, just another day here at Conservapedia.

The award was proposed in August of 2009, in response to a woman being nominated for the Fields Medal. Ironically, said woman did not win said medal.

[[Category:mathematics]]

Autarky

2012-01-11T04:15:01Z

MPeters:

'''Autarky''' refers to two separate, but related, ideas in [[macroeconomics]]: that a country ''can'' be self-sustaining (a positive statement) and that it ''should'' (a normative statement).

An autarkic country does not participate in international trade. No country has been able to produce the full range of [[goods]] demanded by its population at competitive prices. Indeed, those that have tried to do so have condemned themselves to inefficiency and comparative poverty, compared with countries that engage in international trade. This results from the fact that countries have [[comparative advantage]] in different areas; for example, the United States has a comparative advantage in producing [[capital]]-intensive goods, whereas China has a comparative advantage in producing [[labor]]-intensive goods; it is thus more efficient for the United States to produce capital-intensive goods cheaply and trade them for Chinese labor-intensive goods than to produce all types of goods domestically.

[[Category:Economics]]

Monetary policy

2012-01-09T04:21:00Z

MPeters: Add links

Federal Reserve System actions to influence the availability and cost of money and credit as a means of helping to promote high employment, [[economic]] growth, price stability, and a sustainable pattern of [[international]] transactions.

'''Monetary policy''' is policy enacted by a government or government agency with the aim of controlling the money supply.

In the United States, monetary policy is made by the [[Federal Reserve Bank]] and operates using three main tools:
* The reserve ratio
* The discount rate
* Open-market operations

==The Reserve Ratio==
The '''[[reserve ratio]]''' is the ratio of money deposited in a bank that the bank is required to keep on hand. This amount of reserves is to ensure that banks can meet withdrawal demand and also prevents banks from becoming too leveraged.

==The Discount Rate==
The '''[[discount rate]]''' is the rate at which the Federal Reserve Bank will lend money to individual banks. The Fed is a lender of last resort and banks generally meet reserve shortfalls by borrowing from other banks; borrowing from the Fed can be seen as a bellwether of insolvency.

==Open-Market Operations==
The Fed's open-market committee can buy or sell Treasury Bonds to cause money to flow toward or away from the government. These sales or purchases are known as [[open-market operations]].

==Sources==
http://usinfo.state.gov/products/pubs/oecon/chap12.htm

[[Category:Economics]]

Economic justice

2012-01-09T04:18:52Z

MPeters: Usage

'''Economic justice''' describes views within [[moral philosophy]] regarding how economic effort and resources ought to be distributed.

Models of economic justice include:
* [[Laissez-faire capitalism]]: Economic outcomes are just when individuals are free to make economic decisions without interference from government, or violation of [[property rights]];
* [[Egalitarianism]]: Economic outcomes are just when all individuals do similar amounts of work, and receive similar pay;
* [[Marxism]]: Economic outcomes are just when individuals produce according to their abilities and consume according to their needs;

[[Conservative]]s generally subscribe to the laissez-faire model of economic justice. Generally, conservatives believe that it is "fair" to you get what you work for -- the harder you work, the more you earn. To a conservative, it is not unjust if one person earns more than another, so long as both are free to reap the consequences of their own economic decisions without external interference. Thus, [[economic inequalities]] are not seen as social ills to be overcome.

For example, a person in Africa is born with nothing, works hard, saves, and starts a business. However, the business never earns more than the equivalent of $10 a day. A person in America is born into wealth, and his parents create a trust for him so that he is able to live a life of ease. This situation is just to a conservative, because there is no external government interference, and no violation of property rights. However, if the government ''excessively taxes'' the working African, or someone ''steals'' from the wealthy American, this is considered unjust, because it violates their individual economic autonomy -- their right to keep what they earn.

[[Liberal]]s, on the other hand, generally subscribe to either egalitarian or marxist models of economic justice. Generally, they consider it unjust for people to have grossly unequal incomes. Thus, it is ''unjust'' for the African above to work hard and have little, and for the wealthy American to have a lot. Consequently, liberals advocate redistribution of resources and property, in which the rich are taxed to support the poor. Conservatives consider redistribution of resources and property as ''unjust'', because it interferes with an individual's economic autonomy (a key element of economic justice).

[[Category:Economics]]

Elasticity

2012-01-06T03:17:55Z

MPeters: Fixed formula - hit save instead of preview last time

'''Elasticity''' is the ratio of percentage changes of two variables. In economics, it is most commonly applied to measure the responsiveness of quantity demanded (or supplied) to changes in price, income, or price of other goods. For example, the price elasticity of demand is computed as percentage change in quantity demanded divided by percentage change in price, or

:<math>\frac{% \Delta Q}{% \Delta P} = \frac{\frac{Q_{new}-Q_{old}}{Q_{old}}}{\frac{P_{new}-P_{old}}{P_{old}}}</math>

Since a price increase generally leads to a decrease in quantity demanded, elasticity is generally expressed as an absolute value; price-elasticity of demand is understood to be negative.

When two points are of interest, the [[Arc elasticity of demand|arc elasticity}} is used, rather than both point elasticities.

Elasticity may also refer to the stretchiness of a particular object, such as a [[rubber band]].

[[Category: Economics]]
[[Category: Physics]]

Elasticity

2012-01-06T03:17:16Z

MPeters: Expanded formula

'''Elasticity''' is the ratio of percentage changes of two variables. In economics, it is most commonly applied to measure the responsiveness of quantity demanded (or supplied) to changes in price, income, or price of other goods. For example, the price elasticity of demand is computed as percentage change in quantity demanded divided by percentage change in price, or

:<math>\frac{% \Delta Q}{% \Delta P} = \frac{\frac{Q_{new}-Q_{old}}{Q_{old}}{\frac{P_{new}-P_{old}}{P_{old}}}</math>

Since a price increase generally leads to a decrease in quantity demanded, elasticity is generally expressed as an absolute value; price-elasticity of demand is understood to be negative.

When two points are of interest, the [[Arc elasticity of demand|arc elasticity}} is used, rather than both point elasticities.

Elasticity may also refer to the stretchiness of a particular object, such as a [[rubber band]].

[[Category: Economics]]
[[Category: Physics]]

Arc elasticity of demand

2012-01-05T23:18:27Z

MPeters: Expanded

The '''arc elasticity of demand''' is a way of accurately calculating [[elasticity]] and is also known as the '''midpoint method'''.

Elasticity measures percentage change in one variable (usually quantity demanded) in response to a percentage change in another variable (usually price):

:<math>\frac{% \Delta Q}{% \Delta P} = \frac{\frac{Q_{new}-Q_{old}}{Q_{old}}}{\frac{P_{new}-P_{old}}{P_{old}}}</math>

This creates an ambiguity because the same change, in different directions, would yield a different percentage change. For example, suppose that at price 9, 105 widgets are demanded; at price 10, 100 widgets are demanded; and at price 11, 95 units are demanded. Then, if the price rises from 9 to 11,

<math>Elasticity = \frac{\frac{95-105}{95}}{\frac{11-9}{9}} = \frac{\frac{-10}{95}}{\frac{2}{9}} = \frac{-9}{19} \approx -.47</math>

while the price falling from 11 to 9 yields

<math>Elasticity = \frac{\frac{105-95}{105}}{\frac{9-11}{11}} = \frac{\frac{10}{105}}{\frac{-2}{11}} = \frac{11}{-21} \approx -.52</math>

Economists resolve this by averaging the endpoints to use the midpoint between the two endpoints; that is,

<math>Elasticity = \frac{\frac{105-95}{\frac{95+105}{2}}}{\frac{9-11}{\frac{9+11}{2}}} = \frac{\frac{10}{100}}{\frac{-2}{10}} = \frac{-1}{2} = -.5</math>

The elasticity measured from 9 to 11 is then the same as the elasticity measured from 11 to 9.

[[Category:Economics]]

Elasticity

2012-01-05T22:48:30Z

MPeters: Hoping to expand this

'''Elasticity''' is the ratio of percentage changes of two variables. In economics, it is most commonly applied to measure the responsiveness of quantity demanded (or supplied) to changes in price, income, or price of other goods. For example, the price elasticity of demand is computed as percentage change in quantity demanded divided by percentage change in price, or

:<math>\frac{% \Delta Q}{% \Delta P}</math>

Since a price increase generally leads to a decrease in quantity demanded, elasticity is generally expressed as an absolute value; price-elasticity of demand is understood to be negative.

Elasticity may also refer to the stretchiness of a particular object, such as a [[rubber band]].

[[Category: Economics]]
[[Category: Physics]]

Macroeconomics

2012-01-05T21:25:00Z

MPeters: /* Government Policy */ Cleaning redirects

'''Macroeconomics''' is the analysis of the aggregate activity of a nation's [[economy]]. Topics in the study of macroeconomics include [[inflation]], [[unemployment]], and [[fiscal policy]]. The purpose of this discipline is to understand how societies can more effectively achieve goals such as economic growth, economic security, and [[full employment]].

== Development of Macroeconomics ==
Macroeconomics is a relatively new field of study, gaining attention during the 1930's; with the term first being used by the Norwegian nobel prize-winning economist Ragnar Frisch<ref>http://cepa.newschool.edu/het/profiles/frisch.htm</ref> although naturally the principles upon which it is founded have been in existence far longer. During the 1930's it became possible for the first time to collect increasingly detailed economic data on national income, balance of trade and the current account; allowing for a more precise analysis of the entire national economy.

=== The Great Depression ===
[[The Great Depression]] of 1929 was a powerful influence behind the development of macroeconomics, since it highlighted the major flaws in applying [[microeconomics|microeconomic]] theory to the national economy. According to microeconomic, or "market-clearing" theory, the large amount of unemployment following the Great Depression should have been adjusted by the "invisible hand" of the markets, whereby workers revised their wage expectations downwards to the point where firms were willing to employ more workers. However, due to the unemployment and poverty, the demand for goods and services dropped, so firms did not require workers. In addition to this, workers were unwilling to accept substantially lower wages to do the same jobs as before, preventing the wage rate dropping to an appropriate level.
In response to this situation, the British economist [[John Maynard Keynes]] wrote ''The General Theory of Employment, Interest and Money'' in which he outlined the limitations of Microeconomics and put forward many founding macroeconomic principals such as aggregate demand <ref>http://www.economyprofessor.com/economictheories/general-theory-of-employment-interest-and-money.php</ref>, and thus can be considered the "father" of Macroeconomics. Since then many of Keynes' original theories have been subject to intense scrutiny and critique, notably by [[Monetary theory|monetarists]] such as [[Milton Friedman]] who claim government intervention to correct market failure is inefficient, and private firms motivated by [[profits]] and price competitiveness are far better at ironing out market failures.

== Government Policy ==
Typically, governments use [[Fiscal policy|fiscal]] and [[monetary policy]] to stabilize the economy and prevent events such as the Great Depression from happening. Fiscal policy involves government taxation and spending to reduce or increase aggregate demand and Monetary policy seeks achieves the same using the manipulation of [[Interest rates]].

==Schools of Thought==
Since the 1930's, two main schools of macroeconomic thought have developed, although within these other sub-groups exist. The two schools are:
*'''Monetarism'''- advocated by economists such as [[Milton Friedman]] and [[Anna Schwartz]], monetarism rejects Keynes' demand management and government intervention proposals, stating that these create distortions in the market and force out the more efficient private firms. Rather, monetarism seeks to understand changes in the economy through the lens of the money supply.
*'''Keynesian'''- this school stems from the original work of [[John Maynard Keynes]], and uses the principal of [[aggregate demand]] to explain unemployment and changing levels of economic growth. Keynesian economists usually advocate demand management or [[fiscal policy]] as a means of correcting market failure.

==Further reading==
* Buchholz, Todd G. ''New Ideas from Dead Economists: An Introduction to Modern Economic Thought'' (2007), [http://www.amazon.com/New-Ideas-Dead-Economists-Introduction/dp/0452288444/ref=sr_1_2?ie=UTF8&qid=1254858338&sr=8-2-fkmr0 excerpt and text search], by conservative economist
* [http://www.h-net.msu.edu/reviews/showrev.cgi?path=9872935679950 Cate, T., Colander, D., and Harcourt,g. ''Encyclopedia of Keynesian Economics''. 1997]
* Coats, A. W. Bob ''The Development of Economics in Western Europe since 1945'' 1999 [http://www.questia.com/PM.qst?a=o&d=109285982 online edition]
* Dorfman, Joseph. ''The Economic Mind in American Civilization,'' (5 vol 1947-1959), thorough coverage down to 1933.
* Eatwell, John et al eds. ''The New Palgrave Dictionary of Economics'' 3 vol 1998;
** 2nd edition (8 vol 2008), edited by Steven Durlauf and Lawrence Blume
*Ekelund, Robert B., and Robert F. Hebert. ''A History of Economic Theory and Method'' (2007)
* Negishi, T. ''History of Economic Theory'' (1989) [http://www.amazon.com/History-Economic-Advanced-Textbooks-Economics/dp/044470437X/ref=sr_1_18/103-4827826-5463040?ie=UTF8&s=books&qid=1190649241&sr=8-18 excerpt and text search]
* Robbins, Lionel et al. ''A History of Economic Thought'' (2000) [http://www.amazon.com/History-Economic-Thought-Lionel-Robbins/dp/0691070148/ref=pd_bbs_3/103-4827826-5463040?ie=UTF8&s=books&qid=1190648431&sr=8-3 excerpt and text search]
* Roncaglia, Alessandro. ''The Wealth of Ideas: A History of Economic Thought'' (2006) [http://www.amazon.com/Wealth-Ideas-History-Economic-Thought/dp/0521691877/ref=pd_bbs_sr_4/103-4827826-5463040?ie=UTF8&s=books&qid=1190648431&sr=8-4 excerpt and text search]
* Samuels, Warren, John Davis, and Jeff Biddle, eds. ''A Companion to the History of Economic Thought.'' (2003) [http://www.amazon.com/Companion-Blackwell-Companions-Contemporary-Economics/dp/1405134593/ref=pd_bbs_sr_1/103-4827826-5463040?ie=UTF8&s=books&qid=1190729175&sr=8-1 excerpt and text search]
* Samuels, Warren J. ''Histories of Economic Thought'' (2003) [[http://www.amazon.com/Histories-Economic-Thought-Research-Methodology/dp/0762309970/ref=sr_1_16/103-4827826-5463040?ie=UTF8&s=books&qid=1190648431&sr=8-16 excerpt and text search]
* Snowdon, Brian ''The Power of Ideas - an interview with Joel Mokyr'' World Economics July-September 2007 [www.world-economics-journal.com]
* [http://www.chass.utoronto.ca/~munro5/schump.htm#N_1_ Schumpeter, Joseph A., ''History of Economic Analysis'', (1954, 1996)] [http://www.amazon.com/History-Economic-Analysis-New-Introduction/dp/0195105591/ref=sr_1_15/103-4827826-5463040?ie=UTF8&s=books&qid=1190648431&sr=8-15 excerpt and online search]
* Wahid, Abu N. M. ''Frontiers of Economics: Nobel Laureates of the Twentieth Century'' 2002 [http://www.questia.com/PM.qst?a=o&d=107166560 online edition]
==References==
<small><references/></small>

==See Also==
* [[Microeconomics]]
* [[Milton Friedman]]
* [[John Maynard Keynes]]
* [[Ludwig von Mises]]
[[Category:Economics]]

Macroeconomics

2012-01-05T21:24:24Z

MPeters: /* The Great Depression */ Changed link to Monetarists to Monetary theory

'''Macroeconomics''' is the analysis of the aggregate activity of a nation's [[economy]]. Topics in the study of macroeconomics include [[inflation]], [[unemployment]], and [[fiscal policy]]. The purpose of this discipline is to understand how societies can more effectively achieve goals such as economic growth, economic security, and [[full employment]].

== Development of Macroeconomics ==
Macroeconomics is a relatively new field of study, gaining attention during the 1930's; with the term first being used by the Norwegian nobel prize-winning economist Ragnar Frisch<ref>http://cepa.newschool.edu/het/profiles/frisch.htm</ref> although naturally the principles upon which it is founded have been in existence far longer. During the 1930's it became possible for the first time to collect increasingly detailed economic data on national income, balance of trade and the current account; allowing for a more precise analysis of the entire national economy.

=== The Great Depression ===
[[The Great Depression]] of 1929 was a powerful influence behind the development of macroeconomics, since it highlighted the major flaws in applying [[microeconomics|microeconomic]] theory to the national economy. According to microeconomic, or "market-clearing" theory, the large amount of unemployment following the Great Depression should have been adjusted by the "invisible hand" of the markets, whereby workers revised their wage expectations downwards to the point where firms were willing to employ more workers. However, due to the unemployment and poverty, the demand for goods and services dropped, so firms did not require workers. In addition to this, workers were unwilling to accept substantially lower wages to do the same jobs as before, preventing the wage rate dropping to an appropriate level.
In response to this situation, the British economist [[John Maynard Keynes]] wrote ''The General Theory of Employment, Interest and Money'' in which he outlined the limitations of Microeconomics and put forward many founding macroeconomic principals such as aggregate demand <ref>http://www.economyprofessor.com/economictheories/general-theory-of-employment-interest-and-money.php</ref>, and thus can be considered the "father" of Macroeconomics. Since then many of Keynes' original theories have been subject to intense scrutiny and critique, notably by [[Monetary theory|monetarists]] such as [[Milton Friedman]] who claim government intervention to correct market failure is inefficient, and private firms motivated by [[profits]] and price competitiveness are far better at ironing out market failures.

== Government Policy ==
Typically, governments use [[Fiscal Policy|Fiscal]] and [[Monetary Policy]] to stabilize the economy and prevent events such as the Great Depression from happening. Fiscal policy involves government taxation and spending to reduce or increase aggregate demand and Monetary policy seeks achieves the same using the manipulation of [[Interest rates]].

==Schools of Thought==
Since the 1930's, two main schools of macroeconomic thought have developed, although within these other sub-groups exist. The two schools are:
*'''Monetarism'''- advocated by economists such as [[Milton Friedman]] and [[Anna Schwartz]], monetarism rejects Keynes' demand management and government intervention proposals, stating that these create distortions in the market and force out the more efficient private firms. Rather, monetarism seeks to understand changes in the economy through the lens of the money supply.
*'''Keynesian'''- this school stems from the original work of [[John Maynard Keynes]], and uses the principal of [[aggregate demand]] to explain unemployment and changing levels of economic growth. Keynesian economists usually advocate demand management or [[fiscal policy]] as a means of correcting market failure.

==Further reading==
* Buchholz, Todd G. ''New Ideas from Dead Economists: An Introduction to Modern Economic Thought'' (2007), [http://www.amazon.com/New-Ideas-Dead-Economists-Introduction/dp/0452288444/ref=sr_1_2?ie=UTF8&qid=1254858338&sr=8-2-fkmr0 excerpt and text search], by conservative economist
* [http://www.h-net.msu.edu/reviews/showrev.cgi?path=9872935679950 Cate, T., Colander, D., and Harcourt,g. ''Encyclopedia of Keynesian Economics''. 1997]
* Coats, A. W. Bob ''The Development of Economics in Western Europe since 1945'' 1999 [http://www.questia.com/PM.qst?a=o&d=109285982 online edition]
* Dorfman, Joseph. ''The Economic Mind in American Civilization,'' (5 vol 1947-1959), thorough coverage down to 1933.
* Eatwell, John et al eds. ''The New Palgrave Dictionary of Economics'' 3 vol 1998;
** 2nd edition (8 vol 2008), edited by Steven Durlauf and Lawrence Blume
*Ekelund, Robert B., and Robert F. Hebert. ''A History of Economic Theory and Method'' (2007)
* Negishi, T. ''History of Economic Theory'' (1989) [http://www.amazon.com/History-Economic-Advanced-Textbooks-Economics/dp/044470437X/ref=sr_1_18/103-4827826-5463040?ie=UTF8&s=books&qid=1190649241&sr=8-18 excerpt and text search]
* Robbins, Lionel et al. ''A History of Economic Thought'' (2000) [http://www.amazon.com/History-Economic-Thought-Lionel-Robbins/dp/0691070148/ref=pd_bbs_3/103-4827826-5463040?ie=UTF8&s=books&qid=1190648431&sr=8-3 excerpt and text search]
* Roncaglia, Alessandro. ''The Wealth of Ideas: A History of Economic Thought'' (2006) [http://www.amazon.com/Wealth-Ideas-History-Economic-Thought/dp/0521691877/ref=pd_bbs_sr_4/103-4827826-5463040?ie=UTF8&s=books&qid=1190648431&sr=8-4 excerpt and text search]
* Samuels, Warren, John Davis, and Jeff Biddle, eds. ''A Companion to the History of Economic Thought.'' (2003) [http://www.amazon.com/Companion-Blackwell-Companions-Contemporary-Economics/dp/1405134593/ref=pd_bbs_sr_1/103-4827826-5463040?ie=UTF8&s=books&qid=1190729175&sr=8-1 excerpt and text search]
* Samuels, Warren J. ''Histories of Economic Thought'' (2003) [[http://www.amazon.com/Histories-Economic-Thought-Research-Methodology/dp/0762309970/ref=sr_1_16/103-4827826-5463040?ie=UTF8&s=books&qid=1190648431&sr=8-16 excerpt and text search]
* Snowdon, Brian ''The Power of Ideas - an interview with Joel Mokyr'' World Economics July-September 2007 [www.world-economics-journal.com]
* [http://www.chass.utoronto.ca/~munro5/schump.htm#N_1_ Schumpeter, Joseph A., ''History of Economic Analysis'', (1954, 1996)] [http://www.amazon.com/History-Economic-Analysis-New-Introduction/dp/0195105591/ref=sr_1_15/103-4827826-5463040?ie=UTF8&s=books&qid=1190648431&sr=8-15 excerpt and online search]
* Wahid, Abu N. M. ''Frontiers of Economics: Nobel Laureates of the Twentieth Century'' 2002 [http://www.questia.com/PM.qst?a=o&d=107166560 online edition]
==References==
<small><references/></small>

==See Also==
* [[Microeconomics]]
* [[Milton Friedman]]
* [[John Maynard Keynes]]
* [[Ludwig von Mises]]
[[Category:Economics]]

Monetary Policy

2012-01-05T21:23:31Z

MPeters: Redirected to duplicate article

#REDIRECT [[Monetary policy]]

Monetary policy

2012-01-05T21:22:53Z

MPeters: Added material from Monetary Policy

Federal Reserve System actions to influence the availability and cost of money and credit as a means of helping to promote high employment, [[economic]] growth, price stability, and a sustainable pattern of [[international]] transactions.

'''Monetary policy''' is policy enacted by a government or government agency with the aim of controlling the money supply.

In the United States, monetary policy is made by the [[Federal Reserve Bank]] and operates using three main tools:
* The reserve ratio
* The discount rate
* Open-market operations

==The Reserve Ratio==
The '''reserve ratio''' is the ratio of money deposited in a bank that the bank is required to keep on hand. This amount of reserves is to ensure that banks can meet withdrawal demand and also prevents banks from becoming too leveraged.

==The Discount Rate==
The '''discount rate''' is the rate at which the Federal Reserve Bank will lend money to individual banks. The Fed is a lender of last resort and banks generally meet reserve shortfalls by borrowing from other banks; borrowing from the Fed can be seen as a bellwether of insolvency.

==Open-Market Operations==
The Fed's open-market committee can buy or sell Treasury Bonds to cause money to flow toward or away from the government.

==Sources==
http://usinfo.state.gov/products/pubs/oecon/chap12.htm

[[Category:Economics]]

Arc elasticity of demand

2012-01-05T03:58:19Z

MPeters:

The '''arc elasticity of demand''' calculates the elasticity by using the average overall values for [[price]] and [[quantities]] as the respective denominator in calculating the elasticities. The arc elasticity may also be referred to, as in Mankiw's text, as the price elasticity of demand calculated using the '''midpoint method'''.

There is an ambiguity in calculating the percentage change in price or quantity in calculating elasticity of demand. What should be used as the denominator in deriving the percentages? If $100 increases to $110, then the percent change could be described as $10/$100 x 100% or $10/$110 x 100%. Above we used the initial price and quantity as the denominator, but we could have used the final price and quantity as the denominator instead.

Economists resolve this by typically using the “arc elasticity” because it is a more accurate depiction of the “arc” or curve of demand. That is, rather than using 100 or 110 as the denominator, the average (or midpoint) would be used - the elasticity would be measured (10/105)x100%.

[[Category:Economics]]

Relative price

2012-01-05T03:53:24Z

MPeters:

'''Relative price''' relates the price of one [[good]] in terms of another good. A particular good's relative price with respect to another good is how much of this other good must be given to obtain one more unit of the particular good.

Relative prices are used in economic analysis as a way to measure '''real''', rather than '''nominal''', fluctuations.
[[category:economics]]

Discount rate

2012-01-05T03:51:00Z

MPeters:

'''The discount rate''' is the [[interest rate]] paid by commercial [[bank]]s to borrow funds from [[Federal Reserve System|Federal Reserve Banks]].

==Sources==
http://usinfo.state.gov/products/pubs/oecon/chap12.htm

[[Category:Economics]]