financial intermediaries

Financial Intermediaries

Afinancial intermediary is a financial institution that connects surplus and deficit agents. The classic example of a financial intermediary is a bank that consolidates deposits and uses the funds to transform them into loans. The job of financial intermediaries is to connect borrowers to savers. For example, A bank loan is a form of indirect...
Provisions in the Glass-Steagall Act

The Glass-Steagall Act

The Glass-Steagall Act (1933) separated depository institutions from investment banks and limited securities, activities, and affiliations within commercial banks and securities firms. In 1933, in the wake of the 1929 stock market crash and during a nationwide commercial bank failure and the Great Depression, two members of Congress put their names on what is known today as the...
division of output between factories

Division of Output between Factories

The division of output between two factories is a case in which you have two factories; an older factory with a higher Marginal Cost and a newer factory with a lower Marginal Cost. To determine how much each factory should produce, you have to draw a horizontal Price/Demand line across the two graphs (of the old and new factory)....
oil will we ever run out

Peak Oil: Will We Ever Run Out?

As oil becomes scarcer, and as the Laws of Demand tell us, the price of oil will continue to rise. To combat this, on the demand side, we can try to find substitutes to use instead of oil. While on the supply side, we can either try to find more reserve or come up with more substitutes. We would only...
risk strategies for farmers

Risk Strategies for Farmers in Developing Economies

Ex-ante strategies prevent or reduce risk like savings. While ex-post or risk coping strategies cope up with risk like dis-savings. These are two types of risk strategies for farmers to mitigate risk outcome. Factors such as weather, rainfall, pests and diseases hitting crops, irrigation can alleviate some income risk. Aggregate shocks are problems that affect everyone in the village. They are not unique...
the decoy effect

The Decoy Effect

The decoy effect or asymmetric dominance effect is the phenomenon whereby consumers will tend to have a specific change in preferences between two options when also presented with a third option that is asymmetrically dominated. The Decoy Effect An option is asymmetrically dominated when it is inferior in all respects to one option. However, in comparison to the...

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