So, ditto the relative prices of different products. I bet you are some very bright young economist, who has totally forgotten, or never learned, just how hard this is for most first year students.

Posted by: One of the hardest thing in talking to non economists is that they don't look at it this way, and you get into endless conceptual confusions, because they want to talk about everything at once, without even having a model. years.

3) Your story is weakest when defending the particular 2% target. December 11, 2011 at 06:07 AM, "The average price of goods has a definitional problem.

I could have done it quicker and much clearer if I could talk instead of write, draw diagrams on the board, wave my arms around, and make full use of my voice to convey meaning. Posted by: I think that deflation caused by productivity increases can be more than compensated by the diminishing marginal value of our increasing real income. Posted by: Basics of CPI or GDP deflator?

(Indeed, they did shout it from the rooftops in the "Market for Lemons" version, but I don't think that version applies to new hi-tech goods.). Gregor Bush |

Agreed. At the macroeconomic level (closed economy) the equilibrium real interest rate would have to rise to offset this reduction in desired saving. Min: and that is another good question to which we economists have a (reasonably) good answer. When a $5,000 car gets me to work just fine, a $35,000 car offers poor relative value. (adsbygoogle = window.adsbygoogle || []).push({}); Copyright © 2010-2018 Difference Between. There are two effects here. December 09, 2011 at 11:23 AM. My point is this: Isn't the real issue not the price change, but rather what's driving the change in price? December 11, 2011 at 09:58 PM, "Now suppose there's an improvement in technology, so the marginal costs of production fall, and so the supply curve shifts right.

In fact, it would be unfair not to do this. The concept of relative is used in health care industry, as well.

They are pretty much the same apart from the fact that different cash flows also mean different risk and therefore different discount rates need to be applied to these cash flows to arrive at the appropriate valuation. And suppose people believe this, and expect 0% inflation from now on, instead of the 2% they had previously expected. Great article! With 0% expected inflation that incentive disappears, and so the demand curves for many things will shift left as people save more and postpone spending.

So I guess what I meant to ask is:

However, for an industry in general the market is right.

Then some people proposed a lottery where certain serial numbers would be invalidated.

Our job is to try to explain it simply, and clearly.

Posted by: I'm going to edit the post. Absolute P/E . In absolute grading, the grades are already set as more than 85 is A, more than 70 and less than 85 is B, more than 55 and less than 70 is C, etc. For example, if the price of the stock today is $100, and the TTM earnings are $2 per share, the P/E is 50 ($100/$2). Both absolute market share and relative market share can provide businesses with insight about potential areas of growth. He asked me this question: hi-tech prices have been falling, and yet sales have been growing, so why does the Bank of Canada target 2% inflation? Some people decide to wait until next year to buy a computer or camera, because they will get more power for their buck. Could nominal interest rates drop by the same 2 percentage points?

This explanation will be given in the later articles.

With that in mind, it makes you wonder why it would be so challenging to legally designate what now circulates as currency as an ETN with an indexing formula designated by the CB.

Absolute grading is done so that a student’s own potential can be identified.

"I assert the following instead: Demand for currency would decrease because 2% less currency would be required to purchase the same quantity of goods and services. S&P 500 Buyback Index tracks those stocks in the S&P 500 that have the largest annual share buyback ratios. Jon | 1. So we substitute away from other goods and buy more hi-tech goods. *Because* they have different stocks of savings. Let us see how relative perspective is used with regard to poverty in some countries. Show the equilibrium price and quantity. If the reasons are found, then the stock is trading at fair value. So if all prices fell by 10%, the immediate effect is that our money incomes would be 10% lower too, so we wouldn't be able to afford more stuff. Relative Valuation Models:Relative valuation models are different from discounted cash flow models.

December 09, 2011 at 07:18 PM. So price changes cause the *relative* demand for different products to change. If you leave it as an "exercise for the reader", and the reader is an Intro Economics student, it won't be done. Missing out on lower prices in the future. In reality, assuming they want to compete, technology companies can: (1) Change product quality, (2) change product prices, (3) change production costs, or (4) any blend of the previous 3.

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