Calculating Money Supply (M0, M1, etc.)
Imagine you are studying a small island economy. If you wanted to predict things like inflation or business lending, it would be very important to … Read More
Loanable Funds Theory of Interest
When learning about the loanable funds theory of interest, it is important to remember that interest rates are a price…just like anything else in economics. … Read More
Real Interest Rates
Let’s say you lent your friend $5 to buy 20 gum-balls for 25¢ each. You agree that he will pay you $10 in one year’s … Read More
Stock vs. Flow
We’ll start with stock, and then get to flow. Stock explained Imagine you carry your wallet around with you everywhere you go. Periodically, some bills … Read More
GDP Deflator
Let’s imagine once again we are in the scenario from Consumer Price Index (CPI) with the pencils and notebooks for your upcoming school year. Every … Read More
GDP vs. GNP
Imagine you live on a small island, and are in charge of its economy. Periodically, it would be very beneficial to know what the state … Read More