This blog post explores how companies use market interest rates and social discount rates to reflect the value of future generations when evaluating public works. Business investment and the role of the discount rate When a company invests in a project, it evaluates the feasibility of the project by comparing the costs it will incur in the present with the benefits it will receive in the...
How can understanding the concept of options help you reduce risk and increase returns?
In this blog post, we’ll explore how options work in everyday life and investing, and how they can help you make better economic choices. When you think of options, it’s easy to think of financial instruments, but there are many phenomena around us that can be characterized as options. The concept of options is utilized in a variety of situations, including everyday choices and...
How can governments ensure fair competition when mergers harm consumer interests?
This blog post explores the potential for corporate mergers to increase market efficiency while harming consumer interests, and how governments can ensure fair competition. When two or more companies combine their capital and organizations to form an economically unified entity, it is called a corporate merger. These combinations are one of the strategic choices of companies and play an...
How do externalities affect resource allocation and how do governments address them?
This blog post explores how externalities affect resource allocation and how governments can address them. It also explores policies to reduce externalities that lead to market failures. In everyday life, one person’s economic activity affects the economic activity of others, and in most cases this is reflected in market prices. However, there are situations where one person’s...
Why did the dollar remain the reserve currency after the collapse of the Bretton Woods system?
In this blog post, we’ll explore why the dollar remained the reserve currency after the collapse of the Bretton Woods system. We’ll focus on the influence of the US economy and the structure of financial markets. The importance of reserve currencies is directly related to the stability of the international economy, which plays a central role in the global economic order. In...
How to reduce losses and manage risk in stock investing?
In this blog post, you’ll learn how to reduce losses and effectively manage systematic and unsystematic risk in stock investing. This will be helpful for anyone looking for a stable investment strategy. The goal of most people investing in stocks is to grow their wealth, but it’s not always possible to make a profit, and the expectation of profit always comes with the risk of...
Government-imposed taxes: producers or consumers?
In this blog post, we’ll take a look at whether producers or consumers are the ultimate bearers of government-imposed taxes. We’ll use market principles to explain how the tax burden is determined. Governments levy taxes to raise money for their fiscal programs, but how much taxes are levied on whom is very important because one of the principles of tax policy is equitable...
How does the traditional law of diminishing returns change in the age of information technology?
In this blog post, we’ll explore how the traditional law of diminishing returns changes in the age of information technology due to harvest crowding and network externalities. Traditional economics holds that if you keep increasing inputs, at some point the rate of growth of output is likely to decline. This view was especially common in traditional industries such as agriculture and...
How accurately measuring and controlling the quantity of money affects economic stability
This blog post explains the importance and complexity of monetary policy by looking at how accurately measuring and controlling money supply can affect economic stability. Too much or too little money – the total amount of money in circulation – can lead to volatile inflation and affect unemployment and interest rates. As a result, it is increasingly important for monetary...
Current account impact of exchange rate appreciation based on the J-curve and demand structure
This blog post explores the current account impact of an exchange rate appreciation based on the J-curve phenomenon and demand structure. The analysis takes into account various economic factors. In general, an appreciating exchange rate is known to improve the current account balance. The current account balance is the value of exports of goods (including goods and services) minus the...