5 Economic Knowledges Worth Knowing

  • “It has been said that in 1800, not one person in fifty living in England wore socks, but by 1900 not one person in fifty was without them.” source

  • (# of dollars) x (velocity of money) = (real GDP) x (price level). This is an accounting identity and it explains why printing more money must cause inflation (except a little extra money must be printed each year if GDP rises or velocity falls)
  • The Fed should pump in different amounts of money at different times. Why there is a variable demand, explained in terms of a baby-sitter co-op instead of a complex real economy: source

  • (1 – % of lifetime spent working) x wage = $ you can spend
     
  • Angus Maddison’s history of the world economy and Brad Delong’s related charts


     
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