Understanding Macroeconomics: Key Concepts & Policies
Interest Rates
When companies or individuals request a loan, it’s returned with an additional percentage of the original amount. This percentage is called interest, representing the cost of financing. Interest rates are set freely in the market. A high interest rate typically leads to a decrease in investment, as companies will be less inclined to borrow, and fewer loans and projects will be undertaken.
Income Distribution
Income distribution is not perfectly equal; not everyone receives the same wages
Read MoreEnterprise Size and Growth Strategies: A Comprehensive Analysis
Enterprise Size and Growth Strategies
1. Enterprise Dimensions
When discussing enterprise dimensions, we refer to the size of its facilities, a static concept. However, a company’s growth is a dynamic concept. From the company’s perspective, it must consider having an optimum size, which should depend on the overall equilibrium of all costs.
Criteria for Determining Size:
- Number of employees
- Net asset turnover
- Value-added resources
The most commonly used criterion classifies companies as:
- Small (less than
Understanding Macroeconomics: Government, Economy, and Fiscal Policy
Macroeconomics: Government, Foreign Sector, and National Economy
How Can the Government Boost the Economy?
- Fiscal Policy: Increase spending, reduce taxes. This encourages people to spend on products, boosting the economy.
- Monetary Policy: Lower interest rates to encourage borrowing, leading to increased consumption and investment. Increase the money supply.
Governments use monetary policy to influence economic activity. The financial system is essential for economic development, supporting both businesses
Read MoreInvestment Valuation: Methods, Resources, and Financing
Home Despoltsapena: The purchase of assets to pay the amount required to carry out the project.
Annual Net Cash Flow
Annual net cash flow of investment to develop the project at a time, the company that made the difference between the charges and payments.
Residual Value of Goods
The value of investment assets at the end of their life. This residual value is the last cash flow valuation of investment fees included.
Valuation Methods
Static Methods
These methods assume the value of money is constant. They
Read MoreFinancial Markets: Types and Functions
Financial Markets
Any marketplace where the trading of securities occurs. They are made by buying and selling numerous types of financial instruments including equities, bonds, currencies, and derivatives.
What happens when financial markets fail? Economic disruption, recession, and unemployment.
Objective: To channel the savings of families and companies to investment and create security products that provide a return for those who have access to funds and make funds available for those who need
Read MoreUnderstanding Utility, Demand, and Supply in Economics
Understanding Utility, Demand, and Supply
Utility
Utility is the capacity of a commodity or service to satisfy a need.
A good or service is considered useful for someone if that person needs to possess or not possess it.
Types of Income/Utility
- Total Utility (UTX): Represents the sum of satisfaction obtained by a consumer from using a certain amount of goods.
- Average Net Income (UPX): Represents an arithmetic distribution resulting from dividing the total income by the number of satisfiers consumed.
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