Increase in Real wages

As I understand it, real wages do increase over time , as an economy grows and productivity increases. If this is the case , why can we not all afford to buy very expensive goods / services in 50 , or 100 years time ? It can not be because of inflation as by definition real wages have factored inflation in. Would love an e ...continues

Money and Bank lending

As I understand it , in order for our economy to continue to grow and remain 'healthy' banks must create more and more loans every year - as the main way new money enters the economy is via the banking system (I understand that the money base is then increased by Central bank so as to target the Fed funds rate etc.) This be ...continues

8888- patents

Subject: patents Details: . So why do governments issue patents at all? Explain, showing the contrast between the average and marginal cost curves for a firm with very high fixed costs and low marginal costs, and those assumed for the ?standard? textbook firm. What might one predict would happen to the rate of innovation if th ...continues

8889-price theory

Subject: Price theory Details: Consider the elasticity of demand for drugs. How does it affect the terms of this trade-off (talking about short run and long run gains from patents)? Can you explain why, if the elasticity of demand is low, the short-run allocative distortion associated with patent protection?the ?welfare burden ...continues

Need help answering macroeconomics short answer questions

Using ONLY chapter 3 (see attachment) to come up with a short answer for the following questions: Labor Market Determine the decline in nonfarm employment for 2003 using information reported in Chapter 3 of the Economic Report to the President. Determine the monthly average change in nonfarm workers for 2003 and compare ...continues

BOND YIELDS AND INTEREST RATES

I understand that the only way the fed/central bank can influence interest rates (fed funds rate) is via OMO. As i understand it - To increase rates, fed sells bonds (that were previously issued) which pushes the price of bonds in the market down , which leads to higher yields on bonds for those who buy them ... My first ques ...continues

Technology/Productivity and Economic growth

I understand that technology helps to increase productivity , which in turn frees up resources - allowing interest rates to remain lower than otherwise possible. But i am not sure how increased productivity (assuming that is the main benefit of technological advances) drives economic growth. As i understand it economic growth n ...continues

ECONOMIC GROWTH AND HIGHER REAL WAGES - TOUGH QUESTION

As an economy grows and productivity increases, real wages tend to rise - people get richer on aggregate. Real wage growth implies that people are able to purchase more of the goods that are in the basket of goods ( the basket that is taken to measure inflation). So they can buy more of these goods , or presumably other more exp ...continues

PRODUCTIVITY AND GROWTH

I read an article the other day that states: "Productivity improvements should trigger a virtuous cycle that, under the right competitive conditions, will result in economic growth. Productivity creates surpluses. When surpluses are distributed among customers, employees and investors, an increase in demand is created acros ...continues

Federal Reserve and domestic money supply.

If the Federal Reserve purchased gold or foreign currency, how would this purchase affect the domestic money supply?