Group items tagged

The article discusses the price mechanism as a signal for allocation of resources in two markets - consumers goods and stock market. A rational perspective would assume that as demand rises, suppliers are attracted to the particular product as they see incentive for profit and thus supply extends and prices rise. This then has the opposite effect as since prices are high, demand contracts. This self-correcting mechanism is in place for the market of consumer goods, as the article discusses. Eventually, price will return to equilibrium. However, in the case of stocks, as prices of stocks rise, investors are more attracted to the stock as they see incentive for capital gain. Thus demand extends, contrary to the rational model observed in the market for consumer goods. Nevertheless, the article provides supports the notion that as demand rises, prices rise and more of that particular good/service is supplied to the market.

GM's stock price goes way up because an unidentified person offers to purchase more stocks than they thought they would sell. This is a great example of how demand directly affects price.

This articles talks about how there are some recently discovered petroleum reserves in Sudan and how they exploit this abundance by selling it to other countries where there's a lack of it, and, with the profit, the buy weapons and ammo and promote a war that lasts for 19 years.

The article highlights certain industries/producers that succeed during a recession, all related to the idea of negative income elasticities or inferior products. Examples from the article include discount retailers such as Walmart, 'sin industries' e.g. cigarettes, selected services e.g. renovation (people focus on what they have and try to improve it rather than purchasing something new). The article also praises firms that tighten up costs and expand on 'core product' ranges and using 'vast economies of scale' to provide affordable goods to consumers.

This article discusses Egypt's recent economic growth and the effects of the riots lately. It also predicts what its economic growth and GDP will be like in the near future. Interesting article considering how recent it is.

Monetary policy has become even more accommodative since the peak of the financial crisis in Frankfurt. Read more to discover how the central bank has exerted its power in order to ensure price stability, its primary task.