Imagine that you’re the Fed and monetary policy is your domain. The economy has been doing fine: inflation isn’t too high, GDP is growing at a reasonable rate. But then something happens. Consumer confidence drops. The economy shrinks.

What do you do?...

In the previous video, we learned that inflation can add noise to price signals resulting in some costly mistakes from price confusion and money illusion. Now, we’ll look at how it can interfere with long-term contracting with financial intermediaries....

The inflation rate can be somewhat volatile and unpredictable. For example, let’s take the period between 1964 and 1983 in the U.S. The inflation rate jumped around from 1.3% in 1964 to 5.9% in 1970, and all the way up to 14% in in 1980, before dipping...

The quantity theory of money is an important tool for thinking about issues in macroeconomics.

The equation for the quantity theory of money is: M x V = P x Y

What do the variables represent?

M is fairly straightforward – it’s the money supply in an...

Inflation is common in a modern economy. Shifts in supply and demand for goods and services cause prices to change accordingly. When the average level of prices rises, that’s inflation. It means that you’ll need more money to purchase the same stuff....

As many who entered the labor market following the Great Recession know all too well, graduating with a college degree does not mean you’ll easily fall into a good career. Four-year college graduates with entry-level jobs actually earned more in 2000...

Owning a home is a huge part of the American Dream. But is the dream of homeownership really all it’s cracked up to be?

In this new Econ Duel from Marginal Revolution University, Professors Tyler Cowen and Alex Tabarrok weigh in on the issue. Each...

We mentioned before that it’s hard to beat the market. And you shouldn’t try. But what about market anomalies?

One anomaly is the Momentum Effect—where past stock performance predicts future performance, at least a bit. As an example, portfolios with...

For most people in developed countries, retirement comes down to a choice: weighing the costs and benefits of continuing to work vs. leisure. An important factor influencing an individual’s decision is their government’s tax and retirement policies.

Most...

In response to the 2008 financial crisis, the Fed employed some new instruments and approaches to getting the economy back on track. In this video we explore three of these: quantitative easing, paying interest on reserves, and conducting repurchase (and...