Category: Macroeconomics

Three major economic theories dominate the field of economics: neoclassical, Keynesian, and Marxian. Each of them has its own set of assumptions, regulations, and conditions. And, of course, all of these economic theories have their strengths and weaknesses. Thus, will look at each of them in more detail below. 1. […]

Most economies rely on democratic principles, such as majority rule to set government policies. That means people get to vote, and the majority gets its way. This works well in many cases. However, there are situations where democratic principles run into problems. In this article, we will take a closer […]

The words saving and investing are often used interchangeably. However, in an economic context, there is an essential distinction between the two. Therefore, in the following paragraphs, we will take a closer look at the difference between saving and investment and learn how the two terms are connected. Saving Saving […]

The labor supply curve shows how workers respond to changes in wages. That means it shows how much more (or less) they are willing to work if their wages (i.e., the opportunity cost of their leisure time) increase or decrease. In that sense, the labor supply curve is the counterpart […]

The labor demand curve represents the value of the marginal product of labor. That means it shows how much an additional unit of labor is worth to producers and how much work they need. Starting from there, we can identify a number of factors that can cause a shift in […]

Most economists support free trade. However, there are a few arguments that suggest that trade restrictions may be an appropriate measure to protect the domestic economy. The most common arguments for restricting trade are the protection of domestic jobs, national security, the protection of infant industries, the prevention of unfair […]

Exchange rates define the value of a currency in relation to other currencies. Therefore, they are essential determinants for international trade. After all, exchange rates have a significant impact on how cheap or expensive foreign goods or services are, relative to domestic prices. Starting from there, we can measure two […]

There is no right answer when it comes to the distribution of tax burdens. That’s always a subject of heated debate. Although most people agree that taxes are necessary, disagreement usually arises over who should pay for them and how much. From these debates, two main principles have emerged on […]

Taxation is a highly controversial issue. It is challenging to design a tax system that is considered fair by the general public. That’s why the economist Adam Smith presented four basic rules and principles of proper tax policy in his famous book The Wealth of Nations. His maxims are often […]

Population growth affects society in many different ways. Some of those impacts are quite obvious, such as the increase in the size of the labor force or the increase in aggregate demand. That is, more people means more workers and at the same time, more people to consume goods and […]