Essential Macroeconomic Concepts and Policies
Understanding the Natural Rate of Unemployment
The natural rate of unemployment is a combination of frictional, structural, and, as sometimes referred to, surplus unemployment. It is the minimum unemployment rate resulting from real, or voluntary, economic forces.
Inflation’s Impact on the Value of Money
Inflation significantly decreases the value of a dollar over time. As inflation increases the prices of goods and services, the amount of goods and services you can buy with a dollar in the future
Read MoreKey Economic & Monetary Terms Defined
Central Bank’s Foreign Assets
Account balance consists mainly of reserves.
Central Bank Domestic Assets
Account balance consists of:
- Credits to state enterprises, the State Bank, commercial banks, and other institutions
- Fiscal transfers
- Credit-subordinated obligations of financial institutions
Monetary Aggregate
The stock of money in the economy. It takes different definitions depending on the degree of liquidity of the financial assets that comprise it. The Central Bank of Chile considers three monetary
Read MoreGovernmental Accounting: Proprietary & Internal Service Fund Reporting
Rationale for Business-Type Activity Reporting
Question: Which of the following is the best rationale/justification for reporting the business-type activities of government in a separate fund?
Answer: Laws or regulations require that the activity’s costs of providing services be recovered by fees and charges rather than by general purpose taxes or similar charges.
Required Basic Statements of a Proprietary Fund
Question: Which of the following are required basic statements of a proprietary fund?
Answer:
Read MoreFoundations of Economic Growth Theory
Understanding Economic Growth and Living Standards
Our interest in economic growth stems from its direct link to living standards. When analyzing economic well-being over time or across nations, the crucial variable to focus on is output per capita, rather than total output.
GDP Per Capita: A Key Indicator
The primary indicator of living standards is Gross Domestic Product (GDP) per capita, calculated as: GDPpc = GDP / Population.
Why Exchange Rates Fail for Comparison
When comparing living standards
Read MoreUnderstanding Market Models: Perfect and Imperfect Competition
Market Models: An Introduction
To define the different market models, we analyze the concept of market structure, which refers to the number of companies existing within a market and their relative size. This structure reveals the ability of companies to influence the market price, known as the degree of market power. According to this degree, markets can be divided into the following types:
- Perfect Competition Market: Where no single seller can influence the price.
- Imperfectly Competitive Market:
Understanding Money and Central Banking Systems
Understanding Money: Definitions and Aggregates
Types of Money Explained
Fiat money is an asset that has very low intrinsic value as a commodity but maintains its value as a medium of exchange because people have faith that the issuer is liable for any scraps of paper or coins and ensures that the amount issued is limited.
A deposit money bank deposit is IOU money or debt from a bank, as it has to deliver money from the deposit to the depositor and acts as a limit, if requested. It is a medium of exchange
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