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 Unemployment Rate

The unemployment rate refers to the share of the total labor force that is without a job but actively seeking work. It is one of the broadest and most widely available indicators of economic activity. In every economy there are always some people who lose or quit their jobs, while others […]

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Good Deflation vs. Bad Deflation

Deflation is often considered a highly unfavorable phenomenon. Although the idea of falling prices may seem appealing (at least from a consumer perspective), deflation is mentioned amongst the worst things that can happen to an economy. However there are different types of deflation that have different implications. In other words, the […]

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Do We Really Need Economic Growth?

The principle of economic growth has become quite controversial in recent years. While many economists perceived the necessity of growth almost as a dogma, critics have become increasingly numerous. Since the global economies are continuously overexploiting natural and non-renewable resources, the idea of unlimited economic growth seems to be doomed […]

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