Markets and Money: An In-Depth Look at Economic Systems
The Market and Money
In all economic systems, specialization is key. Companies produce, families consume, and the public sector regulates and controls. This specialization necessitates mechanisms for exchange: the market and money.
A. The Market
Originally a physical place for buying and selling goods, the term ‘market’ has evolved. Every market involves three elements: a product, a seller, and a buyer. ‘Market’ encompasses all trading activities of a product between suppliers (sellers) and buyers.
Read MoreEuropean Central Bank: Functions and Monetary Policy
ECB: European Central Bank
The European Central Bank (ECB) was created to support the euro and ensure price stability. The ECB and the national central banks of EU member countries form the European System of Central Banks (ESCB), with the ECB’s bodies defining and implementing monetary policy in the countries that adopted the euro.
ESCB Functions
- Define and implement monetary policy in the euro area.
- Conduct foreign exchange operations.
- Hold and manage official reserves of participating members.
- Ensure
Global Commerce and Currency Markets
International Trade
Trade vs. Protectionism
Trade is the exchange of goods and services between countries, driven by differences in resources, tastes, and climate. The principle of comparative advantage suggests that countries specialize in producing goods where they have a relative cost advantage, leading to increased overall production, competition, and expertise.
Protectionism involves barriers that impede international trade. Motives for protectionism include protecting emerging and strategic
Read MoreKeynesian Economics: Aggregate Demand and Income Balance
The Keynesian Model: Role of Aggregate Demand
According to Keynes, high unemployment results from deficient aggregate demand, particularly low investment demand. Marshall argued that knowledge and training could increase workforce skills and prevent poor economic decisions leading to unemployment. Keynes proposed that economic policy actions could raise output and employment by stimulating production and increasing consumer income.
Simple Keynesian Model: Equilibrium Conditions
Equilibrium occurs when
Read MoreUnderstanding Global and National Trade Dynamics
Item 8:
1. Trade in the World Today
Trade is the exchange of goods between a producer (usually the seller) and a buyer (the consumer). Markets have historically been places where trade occurs. Initially, markets were physical locations, including buildings where goods were bought and sold. Currently, purchases can be made by mail, telephone, and the Internet. The market has become a mechanism for buyers and sellers to determine the price of a commodity. The amount of circulating products or services
Read MoreUnderstanding Employee Compensation: Salary Structures & Regulations
Item 9: Salary
9.1 Concept
Salary is the total economic compensation received by workers, in cash or in kind, for professional labor services, including work and rest periods. It excludes amounts received as compensation for work-related expenses or Social Security benefits. Wages are typically determined by collective agreements or employer-employee negotiations.
Factors influencing wage determination:
- Position held
- Skills, expertise, and responsibilities
- Employee loyalty and availability
- Company performance
- Individual