Ahmet Tiryaki

Ahmet Tiryaki

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Positive statements in economics are statements that intend to describe how things are and how things work. A normative statement is a prescriptive statement, like the ones expected to be made by a policy adviser, involving normative judgements prescriptions about how the world should be.
If the underlying cause of inflation and its harmful effects are so well-known, why do policymakers not stop it? One reason behind this failure is that cutting money supply to reduce inflation is often thought to raise unemployment. This tradeoff between inflation and unemployment is sometimes illustrated by a curve called the Phillips curve. While this relationship examined first by British economist William Phillips raises much controversy in economics, but most economists today recognize the possibility of the presence of a tradeoff between inflation and unemployment at least in the short-run. In other words, in relatively short periods of one to two years, economic policies introduced to control inflation may lead to an increase in unemployment or vice-versa.
When unemployment in the USA increases, for example, investors in other countries begin to expect the Fed to cut interest rates. This typically leads to an increase in short-term financial capital flowing into emerging market economies, causing the national currencies of these countries to appreciate against the US dollar. This appreciation, in turn, affects international competitiveness of these countries negatively, and lowers their exports. As a result, unemployment among workers in the export sectors of emerging economies may increase, pushing down their living standards.
Production Possibilities Frontier is a graph that shows the combinations of output that a firm or a society can possibly produce using the available production technology and the given amount of inputs. (Üretim adetleri birbirlerine yaklaştıkça x'ten vazgeçip y'yi üretirken x'ten yaşadığımız kayıp, adetler arasındaki fark çokken olana kıyasla daha fazla çünkü bu birini üretmekte verimli olan üretici faktörlerle diğerini üretmeye başlamışız anlamına geliyor. Kayıp verimli üretici faktörü verimsiz ürettiğini üretmeye yöneltmemizden artıyor.)
Economists call it a market failure when the market itself falls short of allocating resources efficiently. One possible cause of such failures is the presence of externalities. An externality is the often unintended impact that an economic actor’s actions on the well-being of another actor who stands by. The best known example of an external cost (or negative externality) is pollution generated as a byproduct during a production process. (...) As for external benefits (or positive externalities) the classic example is R&D (research and development) activities that lead to productivity-enhancing inventions.
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Ahmet Tiryaki
Türk Akademisyen

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