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N. Gregory Mankiw: 2 ideas worth knowing

2 ideas from N. Gregory Mankiw, each explained in a minute and credited to the original work. Free on Savvy.

• The cost of reprinting a menu can help explain a recession

  Changing a price isn't free - relabelling shelves, reprinting menus, and notifying customers all cost something, even if only a little. Economist N. Gregory Mankiw showed that firm…

  — N. Gregory Mankiw, Small Menu Costs and Large Business Cycles: A Macroeconomic Model of Monopoly

• Government borrowing can quietly starve private investment

  When a government ramps up borrowing to fund spending, it competes with businesses for the same pool of loanable funds, which can push up interest rates. Firms that would have borr…

  — N. Gregory Mankiw, Macroeconomics

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