Financial System, Central Banks, and Monetary Policy Basics
The Financial System and Intermediaries
Financial intermediaries are banks (those whose indirect financial assets are generally accepted as payment) and non-bank institutions (those that issue non-financial assets, often referred to as narrow money).
The financial system consists of the set of institutions that mediate between applicants and suppliers of financial resources.
Components of the Financial System
- Financial Intermediaries (Banks): Bank of Spain, private banks, savings banks, credit unions,
Global Economic Stability: WTO, IMF, World Bank, and India’s Free Trade Strategy
World Trade Organization (WTO)
The World Trade Organization (WTO) is an international organization that deals with global trade rules between nations. Its primary objective is to promote free and fair trade among countries, ensuring a level playing field and fostering economic growth and development.
Key Functions of the WTO
- Negotiating Trade Agreements: The WTO provides a platform for member countries to negotiate trade agreements, reducing tariffs and other trade barriers.
- Resolving Trade Disputes:
Understanding Urban, Rural, and Tribal Communities
Communities: Urban, Rural, Tribal
Urban Communities
Definition
Urban communities refer to populations living in cities and towns, characterized by a high density of population, infrastructure, and economic activities.
Characteristics
1. High Population Density: Urban areas have a high concentration of people, leading to increased social interaction and diversity.
2. Diverse Economy: Urban economies are diverse, with a mix of industries, services, and commerce.
3. Modern Infrastructure: Urban areas have
Factors Determining Economic Productivity and Output
Factors Determining Economic Productivity
An increase in the capital-to-labor ratio (K/L) causes an increase in output per worker (Y/L).
How Productivity Is Determined – Part 1
- Natural Resources (N)
- Inputs into production that nature provides (land, rivers, and mineral deposits).
- Natural Resources per Worker (N/L)
- Other things equal, more natural resources allow a country to produce more output (Y).
- An increase in N/L causes an increase in Y/L.
How Productivity Is Determined – Part 2
- Technological Knowledge
Understanding Industrial Clusters and Their Impact
What are clusters?
Clusters are geographic concentrations of companies, specialized suppliers, service providers, and associated institutions acting in a particular field of industrial activity or any other economic sector in a country or region.
What are the factors that determine industrial location?
These factors are diverse and among them are:
- Access to markets: The end of all industrial production is to meet demand; thus, a location near consumer markets can be decisive, as it reduces transport
Key Concepts in Macroeconomics: GDP, Unemployment, and Money
Gross Domestic Product (GDP) and Economic Health
Gross Domestic Product (GDP) is a measure of the value of all goods and services produced within a country’s borders in a given period of time, typically a year. It is used to measure the size and health of a country’s economy.
Calculating GDP: Three Approaches
GDP can be calculated in three ways:
- The Output Approach: Adding up the value of all goods and services produced in a given period.
- The Income Approach: Adding up the income generated by those goods