Assuming the current exchange rate remains the same, she will never pay off this mortgage. Her payment in Swiss francs is less than the monthly interest. Therefore, she is experiencing negative amortization in forints. Continue Reading →
National income accounting is not particularly easy or interesting. But those who try to use GDP should know what they’re talking about. Mr. Davidow has sadly failed this test. Continue Reading →
It seems to me there is a simpler and more direct explanation: demand. Higher prices for any product reduce quantity demanded. And for a specific item such as beef, demand elasticity is likely to be fairly high. The reason firms are not raising retail prices is simple: it would not be profitable because they would lose more unit sales than they would gain from the higher price. Continue Reading →
Scarce goods and services (pretty much anything with a price) must be rationed somehow. Letting the price of a good adjust takes care of the problem automatically. If the price is below equilibrium, quantity demanded will exceed quantity supplied. The price will rise until the two quantities are equal. Continue Reading →
This translates into a boost in the stock price of 3.17%. Without the stock buyback, the price would have been $503.72 under this scenario. Continue Reading →
The Times is just plain wrong. The true minimum wage is zero. That’s what you make when you lose your job because the minimum wage was raised. Continue Reading →
money is used to purchase goods and services. While income and wealth are valued in money units, that is their only relationship with money. Income is the annual flow of purchasing power earned by an individual. Wealth is the accumulation of past saving plus any increases or decreases. Continue Reading →
First Lady Michelle Obama has heavily promoted healthier school lunches. This is the first regulation. Many schools (including our local high school) have signed up for this program. The school cafeteria now sells food that many students do not want to eat. Aha! An entrepreneurial opportunity. In this case the entrepreneurs are food trucks. These folks park on the street behind the high school (actually right next to the tennis courts). Students flock to them to pay for food they actually want to eat. Continue Reading →
The damage from a minimum wage hike depends on the overall labor market. If the job market is buoyant, as it is in the fracking boomtown of Williston, N.D., fast-food workers may already make more than $9 an hour. But when the jobless rate is high, as it still is in California and New York, the increase punishes minority youth in particular.
That is what happened during the last series of wage hikes to $7.25 from $5.15 that started in July 2007 as the economy was headed toward recession. The last increase hit in July 2009 just after the recession ended, and as the nearby chart shows, the jobless rate jumped for teens and black teens especially. For black teens, the rate has remained close to 40% and was still 37.8% in January.
A study by economists William Even of Miami University and David Macpherson of Trinity University concludes that in the 21 states where the full 40% wage increase took effect, “the consequences of the minimum wage for black young adults without a diploma were actually worse than the consequences of the Great Recession.”
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Economists recognize three main impacts of the minimum wage. The two I will be concerned with here are impacts on employment and impacts on income distribution. The third effect, the impact on total income, I’ll deal with in a cursory fashion.
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