National Accounts, Income-Expenditure, Financial Markets, and IS-LM Model
National Accounts
GN = C + I + G + XQ, Y = C + S + T = C + I + G + XQ, (S-I) = (G-T) + (XQ), Yd = Y-T = C + S
Income-Expenditure Model (The Multiplier)
C = Co + C1(Yd), S = -Co + (1-C1)(Yd); On balance… Y = (1/(1-C1))(Co – C1*T + I + G)
Z = Co + C1(Yd) + I + G, C1 proportional to 1/(1-C1) consumption, 1-C1 proportional to savings
In equilibrium Z = Y, if Z > Y excess demand increases and, x is first consumed. Accumulated surplus stocks last, and consumption decreases.
1. Declining investment: Since
Read MoreInvestment Concepts, Cash Flows, and Project Evaluation
1. Concept of Investment
Definition of Investment
Investment is the disbursement made to earn income exceeding the initial payment.
Definition of Investor
An investor is a person or company that provides the expenditure required for investment. Investments can be classified based on the investor’s role:
- Economic Investment: The investor manages the project and directly produces goods or services.
- Financial Investment: The investor only provides capital.
- Social Investment: Aims for societal improvement
Understanding Financial Systems: Institutions, Markets, and Assets
Concept of the Financial System
A country’s financial system comprises institutions, media, and markets. Its objective is to facilitate resource allocation between economic units saving and those investing.
Composition of the Financial System
Institutions
Entities or agencies mediating between savers and investors, enabling resource transfer.
Media
Financial instruments (services or products) offered by intermediaries to facilitate fund transfers from savers to investors.
Markets
Venues where financial
Read MoreEntrepreneurship and Business Innovation in the Digital Age
Item 2
1. Entrepreneurship
Projects and enterprises need leadership to meet objectives. This requires specific personality traits and technical skills, varying by project or business.
Entrepreneur: A person with initiative and risk-taking ability who creates a company, establishes its objectives, and directs efforts to achieve them.
1.1 The Entrepreneur Throughout History
Before 18th Century: Squire, Master Craftsman (early organizational work).
Mercantilism (18th Century): Sedentary Merchant; Management
Read MoreFinancial Accounting: Key Concepts and Principles
Financial Accounting Fundamentals
Key Accounting Concepts
- Assets: Resources controlled by a company as a result of past events and from which future economic benefits are expected to flow to the entity.
- Liabilities: Present obligations of an entity arising from past events, the settlement of which is expected to result in an outflow from the entity of resources embodying economic benefits.
- Equity: The residual interest in the assets of the entity after deducting all its liabilities.
Understanding Liabilities
Types
Read MoreTaxes, Accounting, and Auditing in Business
Taxes:
Direct Taxes: These taxes fall directly on individuals or companies. Examples include:
- Personal Income Tax: Levied on personal income earned from employment, capital, or other sources.
- Corporation Tax: Paid by corporations on their profits, with the amount proportional to the benefit obtained.
- Economic Activities Tax (IAE): Paid annually by businesses, professionals, or artists.
Indirect Taxes: These taxes are paid when a product or service is purchased. Examples include:
- Asset Transfer Tax: Paid