Core Concepts of Money, Supply, and Monetary Policy
Understanding Money and Its Functions
- Store of value: Money allows transferring purchasing power into the future. However, it’s an imperfect store due to inflation eroding its value.
- Unit of account: Money provides the common terms for quoting prices and recording debts.
- Medium of exchange: Money is used to facilitate transactions for goods and services.
Money Classifications (Aggregates)
Money supply is often categorized into different aggregates:
- M0/MB (Monetary Base): Currency in circulation plus bank
Understanding Free Trade: Benefits, Barriers, and Commercial Policies
Free Trade and Barriers
Free trade (barriers to trade)
- Absolute and Comparative Advantage and Heckscher-Ohlin theory assume free trade and a perfect market (no tariff or differentiated taxes).
- Earnings from trade can be mathematically proven.
- Graphically: points of after-trade consumption are always beyond the PPF.
Gains from Free Trade
- Economic Gains: Increase in the standard of living and economic growth resulting from a country’s engaging in free international trade.
- Political Gains: Increases in
Understanding Economic Activity: Key Concepts & Systems
Understanding Economic Activity
Economic activity encompasses all human actions aimed at organizing the production, distribution, and consumption of goods and services.
Needs and Goods
Needs can be basic, such as food, housing, or energy, or non-essential, like a car. Goods are products, both tangible (food) and intangible (services), that satisfy these needs.
Resources
Resources are the natural substances and materials used to produce goods that meet human needs. These resources originate from the Earth’
Read MoreSocio-Economic Factors Impacting Marketing Strategies
Socio-Economic Factors and Marketing
The socio-economic framework significantly impacts marketing practices. While satisfying consumer needs is universally applicable, the concept of ‘benefit’ requires careful consideration within different socio-economic contexts. The differences between socialist and capitalist socio-economic frameworks are substantial. Capitalist economies generally align with the free market model, while socialist economies adhere to planned development principles.
Socio-Economic
Read MoreUnderstanding Foreign Exchange Risk Exposure: Types and Examples
Types of Foreign Exchange Risk Exposure
- Types of foreign exchange risk exposure
Transaction Risk
Transaction Risk is the risk of an exchange rate changing between the transaction date and the subsequent settlement date. Thus, it is the gain or loss arising on conversion.
This type of risk is primarily associated with imports and exports. If a company exports goods on credit, then it has a figure for debtors in its accounts. The amount it will finally receive depends on the foreign exchange movement
Read MoreCore Concepts in National and International Economics
National Economy
The domestic economy comprises numerous smaller economic units. It’s an entity that can operate within its own sphere while maintaining a common unitary nature.
The national economy has been defined as an organized unit of individual and corporate economies existing in a superimposed state, encompassing the financial economy within the state itself.
International Economics
This field studies the economic behavior of entire economies by examining fundamentals such as:
- Total economic output
- General