Understanding Money and the Financial System
The Funding Process
To consume or invest, financial resources are needed. The savings are produced by the members of a family. Companies and the state sometimes save. Why do people save? One reason is uncertainty. Saving is produced by all players, but most of the savings are done by families. The financial system consists of a set of institutions that mediate the money.
Financial intermediaries issue a series of instruments called financial assets because they generate a series of rights to their
Read MoreEconomic Concepts: Unrecorded Activity, GDP, HDI & More
Understanding Key Economic Concepts
Unrecorded Economic Activity
Unrecorded economic activity refers to economic transactions that are not officially documented or taxed. This includes activities like moonlighting and other informal work.
Gross Domestic Product (GDP)
GDP represents the total value of all goods and services produced within an economy during a specific period.
Human Development Index (HDI)
The HDI is a composite index that measures development using indicators of health, education, and
Read MoreDistribution Channels and Methods for Businesses
After the product, price, and promotion have been decided, the product or service has to be available to the consumer where and when they want to buy it. Consumers should be able to get to the product easily, and the product has to be in the right place (e.g., expensive chocolate shouldn’t be in a small grocery store) to sell well.
Channels of Distribution
Businesses need to know how to get the product to the consumer. They may use a variety of distribution channels:
- Channel 1: The manufacturer sells
Tangible Fixed Assets and Leasing: Valuation and Accounting
Tangible Fixed Assets
Initial Assessment
Tangible assets are measured at the purchase price or production cost. Indirect taxation of these goods will only be included in the purchase price or production cost if they are not recoverable.
The initial estimate of the present value of obligations associated with decommissioning, such as costs of remediation of the site on which it stands, will be part of the value of the property, provided that such requirements will lead to registration in accordance
Read MoreKey Financial Terms and Accounting Principles
Net Income
Net Income is the residual amount of earnings after all expenses have been deducted from sales. In short, gross income is an intermediate earnings figure before all expenses are included, and net income is the final amount of profit or loss after all expenses are included.
Net Sales Calculation
Net sales is total revenue, less the cost of sales returns, allowances, and discounts. This is the primary sales figure reviewed by analysts when they examine the income statement of a business.
Statement
Read MoreEconomic Agents and Decision-Making Factors
Economic Agents and Their Decision-Making Processes
Factors Influencing Economic Decisions
Economic agents make decisions when they are free to do as they wish. The State intervenes only when there are serious problems or defects to be corrected. But how do all economic actors coordinate to make the economy run smoothly?
- Economic rationality: Minimize opportunity cost.
- Action: Agents act.
- Incentives: Leverage incentives.
It is generally accepted that when agents act seeking their individual benefit, they
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