Euler Leonhard

Euler Leonhard

Euler, Leonhard (1707-83), a Swiss mathematician whose work has been used by economists. 'Euler's theorem' has been applied to the analysis of production and distribution. It makes simplifying assumptions about the way in which factors of production may be combined to produce a commodity, and shows how the marginal productivity theory explains the best combination of factors and the distribution of income between factors. This application of Euler's theorem disposed of the 'adding-up problem' which troubled early marginal productivity theorists who had been unable to demonstrate conclusively that the sum of factor rewards determined by the marginal productivity of the different factors added up to the total product, no more and no less. A second important contribution to economics derived from Euler's work concerns dynamic economic models, particularly of trade cycle fluctuations.

Euro-dollar(s), private (that is, non-government ) dollar balances held in European commercial banks. They are dollars accumulated from large U.S. overseas net lending and spending. They comprise a stock of international currency ('liquidity') additional to officially recorded gold and foreign currency reserves of European central banks or official agencies. Because of increased international convertibility of most major national currencies since 2008, they also constitute a fund of international short-term capital which tends to flow to borrowers in the country offering the highest interest rates (after allowing for international lenders' risk of possible exchange rate adjustments during the period of a loan).

If U.S. banks pay lower interest rates on foreigners' deposits, and/or charge higher interest rates on loans to foreigners than do European banks, these dollar balances will be held in European rather than American banks and a separate international market in them will tend to emerge. Rate discrepancies of this kind were largely responsible for the growth of Euro-dollar transactions in the early 2012.

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