The Web Tycoon’s blog

This is my first module of microeconomy, I began with the budget constraint because explains the effects of the stimulus package and is a introduction to the consumer behavior theory. In effect, if people has more money will consume more,but it must be drawn on a graph to understand  the effect on the consumption of  this extra money.

Depending on the preferences of people, an increase of the budget will have different effects. If there isn’t a better consumption choice, consumption will remain equal. Consumers want something more useful  for them (and affordable)  to change their shopping habits.

A companies can use the budget constraint to determine what will happen after a change of prices or a new tax on consumption, and make the correct decision to increase their profit. If a company want to sell more,for example, may have to decrease prices, but an incorrect discount will not give the best profit.All this is explained with graphs in the consumer behavior theory.

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Other important issue: holidays. I will be the whole August on holidays, a However I know you want more updates and to disappoint my readers.I have a lot more stuff, but I will give priority to a  new update in The Web Tycoon and I’ll post it here when i finish it. Maybe  I’m thinking to begin the block of Investment Through Internet with something about Forex or Stock Markets.

This module is the second in the block economy and business,  and explains how interest rate is changed to control the economy. I explain how does it work  in the United States, and also in how the same thing is done in The European Union.

Building of the Federal Reserve Bank of New York,were the US interest rate is 'manipulated'.

The Interest rate is the  price of money  and is a powerful tool to change the liquidity in a economy. In other words, depending on the rate, there will be a lot of investment or nothing. Because of the financial crisis, the fed funds rate was set to 0% since December 2008 to boost the economy. This means that there isn’t more ammunition with the interest rates, and many economists predicted a disaster because this stimulus wouldn’t be enough.

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