Central Banks and Monetary Policy

Central Banks and Monetary Policy

Central banks are independent national institutions that provide financial and banking services. One of their main focuses is monetary policy, i.e. the regulation of money supply within a nation’s economy. Monetary policy is necessary to control inflation and ensure the stability of the financial system. Thus, central banks such as the […]

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Four Properties of Indifference Curves

Four Properties of Indifference Curves

Indifference curves are graphs that represent various combinations of two commodities which an individual considers equally valuable. The axes of those graphs represent one commodity each (e.g. good A and good B). Indifference curves are widely used in microeconomics to analyze consumer preferences, the effects of subsidies and taxes, and a few other concepts. […]

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The Efficiency Wage Theory

According to the Efficiency Wage Theory firms can operate more efficiently and become more productive if they pay wages above the equilibrium level. There are actually four different theories, according to which firms can benefit in four different ways from paying efficiency wages: higher employee effort, lower employee turnover, attracting higher quality employees, and more […]

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The Four Types of Economic Systems

As you probably know, there are countless economies across the world. All of them are unique in their own way, but they still share a significant number of characteristics. Thus, we can categorize them into four types of economic systems; traditional economies, command economies, market economies and mixed economies. All of them rely on […]

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