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What Is Economics?

A good understanding of economics begins with understanding what economics is...and what it isn't.

Economics Spotlight10

Heuristics Used in Prospect Theory

This article outlines the editing heuristics outlined by Kahneman and Tversky in their description of prospect theory.

The Endowment Effect

This article explains what the endowment effect is and why it arises in individual decision making.

Status-Quo Bias

This article explains what status-quo bias is and why it arises in individuals' decision-making processes.

The Motivation for Prospect Theory

This article gives a brief introduction to prospect theory and shows the motivating principle that led to its development.

The Overchoice Problem

This article explains what the overchoice problem is and summarizes some of the evidence that researchers have for the phenomenon.

The Assumptions of Economic Rationality

This article outlines the specific properties that economists refer to when they describe behavior as economically rational.

The Government Spending Multiplier

This article explains the logic behind the government spending multiplier and derives how the multiplier is calculated.

Marginal Propensity to Consume

This article explains what marginal propensity to consume is and shows how it is calculated.

The Money Multiplier

This article introduces the concept of the money multiplier and gives a formula for it.

Introduction to Fractional Reserve Banking

This article explains how the commonly-used fractional reserve banking system works.

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