Understanding Money: Functions, Types, and Value
Understanding Money
Money: Is any merchandise that is commonly accepted by a society as a means to exchange to pay for goods and services.
Features of Money
- Medium of Exchange: Money must be interchangeable. This occurs when it is essentially required to be exchanged for other goods and services.
- Unit of Account: Money must be an accounting unit. This occurs when the value of a good is normally used to express the value of other goods and services.
- Store of Value: Money must be a conservative value.
Advertising’s Economic Impact: Views, Competition, and Effects
The Economics of Advertising: An Analysis
1. Three Views of Advertising Economics:
The three views of advertising economics that have evolved are: Informative view, persuasive view, and complementary view. Advertising affects demand by exerting a complementary influence on the consumer’s utility function with the consumption of the advertised product.
2. Main Impact of Advertising on Society’s Economy:
The typical expected effects are to raise sales, maintain them over time, and improve the general
Read MoreInflation and Unemployment: Causes and Effects
Inflation and Unemployment: A Deep Dive
Understanding Unemployment
Unemployment occurs when individuals are actively seeking work but cannot find employment. The unemployment rate represents the percentage of unemployed workers within the total labor force. There are two primary types of unemployment:
- Voluntary Unemployment: Occurs when a worker declines a job because the offered wage is deemed too low.
- Involuntary Unemployment: Arises due to external factors, such as union influence or government regulations,
Fiscal Policy’s Role in Economic Development
Key Objectives and Impact
Fiscal policy plays a crucial role in shaping the economic landscape of developing countries. Here’s a breakdown of its significance:
Resource Mobilization
To Mobilize Resources: The primary goal of fiscal policy in underdeveloped countries is to mobilize resources in both the private and public sectors. Due to generally low national and per capita income, and low savings rates, governments use fiscal policy to encourage forced savings. This boosts investment and capital
Read MoreUnderstanding Key Economic Concepts and Policies
Key Economic Concepts and Policies
Economy: The science of the choices we make and how those choices change.
Microeconomics vs. Macroeconomics
- Microeconomics: The study of how households and firms make decisions and interact with each other in the markets.
- Macroeconomics: The study of the functioning of the economy as a whole, including various assets and markets, reducing them to a single good.
Fundamental Economic Concepts
- Real income: The sum of all production made by all firms in an economy during
Macroeconomics: GDP, Inflation, Money, and Trade
Calculating GDP
Expenditure Approach: Consumers + Investment + Government Spending + Net Exports (Exports – Imports)
Income Approach: Rent + Wages + Interest + Profits
Nominal vs. Real GDP
- Nominal GDP: (Price per year * Quantity per year)
- Real GDP: (Price base year (given) * Quantity per year)
GDP Deflator: (Nominal GDP / Real GDP) * 100
% Rate of Change: ((Final – Initial) / Initial) * 100
GDP per Capita: GDP / Country Population
Inflation Rate: ((GDP Deflator Final – GDP Deflator Initial) / GDP Deflator
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