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HHM Finance Night - Economics 101
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HHM Finance Night - Economics 101

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General information for basic understanding of the Economic System.

General information for basic understanding of the Economic System.

Published in: Economy & Finance

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  • 1. 1 Economics 101 Presented by: Jennoa R. Graham, Ph.D. Friday, April 4, 2014
  • 2.  Economics – A social science that focuses on the process of producing and exchanging goods/services  Microeconomics – Focus on a single/small portion of the whole economy; one company or one city  Macroeconomics – Focus on the whole economy; entire country or entire world 2
  • 3.  Tangible – Product that you can touch  Clothing  Car  Food  Intangible – Services that you cannot touch  Electricity  Indoor Plumbing  Knowledge/Skills 3
  • 4.  The Economic System – Macroeconomic decisions of  Products  What should be produced?  How much should be produced?  How/Where the products will be distributed?  Services  What services are needed?  How will these services be performed?  Where will these services be available? 4
  • 5.  Supply – Quantity of goods/services available for sale  Demand – Quantity of buyers wanting to purchase goods/services available for sale  The Market – manipulation of supply and demand to meet micro and macro needs of the Economic System; must be managed 24/7 and impacts the world economy 5
  • 6.  Supply and Demand Graph  The Economic System  The Competitive Market System  The Financial Market System  Other Economies 6
  • 7. 7 P = Price; Q = Quantity; D = Demand; S = Supply As Demand goes down; quantity available for sale stays high (fewer sales). D Shift left = decrease D Shift right = increase S Shift none = constant As Supply goes up; quantity available for sale stays high (inventory on hand). Best Price
  • 8.  Traditional  Based on Family and Community Interaction  Heavy dependence on customs and rituals  Market (Pure)  Based on the selection AND consumption of goods and services from Individual Consumers  Command (Planned)  The government decides ALL aspects of Consumer selection and consumption  Mixed  The government decides SOME aspects of Consumer selection and consumption 8 http://www.slideshare.net/Geckos/the-four-types-of-economic-systems-presentation
  • 9.  Form when many Producers/Manufacturers compete with one another to offer products to a large group of Consumers for PROFIT 9
  • 10.  Primary  Starting line for financial products  Origination Details  Contracts Drawn  Securities issued  1st Buyer gets 1st Dibs  Secondary  Buyers and Sellers resell financial products to 3rd Party  Stock Exchange  3rd Party assumes all contract risk/liability 10  “Financial products, including the supply of credit, mortgages, company shares and insurance, are bought and sold in primary and secondary financial markets.” (Economics Online)
  • 11.  Money Markets  Purchase and sale of short term debt (<1yr)  Loans  Treasury bills  Purchases are made to help other banks short on cash  Sales are made to increase available cash on hand  Capital Markets  Purchase and sale of long term debt (>1yr)  Stocks (stock exchange)  Bonds  Company shares  Purchases are made in hopes to sell at a profit  Sales are made to make a profit or avoid large losses 11
  • 12.  Mortgage Markets  Making long term loans for buying property and earning interest profits  Sales are made to increase available cash on hand  Or avoid large losses on high risk loans  Insurance Markets  Transferring risk from one party to another  Transfer is made in hopes that premium income is greater than claims paid – profit earned 12
  • 13.  Contemporary – A comparative analysis of the changes in the global economy over 50 years  Capitalism – Private owners control the Market Economy (see slide # 8)  Participatory – Production and distribution of goods are provided by the public  Gift – Goods and services are distributed with out expectation of return or profit  Barter – Goods and services are exchange for other goods and services with no monetary/currency 13 http://en.wikipedia.org/wiki/Economic_system
  • 14.  Economics is social science that focuses on the process of producing and exchanging goods/services on two levels  Micro = Small  Macro = Large  Supply and Demand determines price of goods and services for Consumers  Stock Exchange is a finance product that is part of the Secondary Financial Market  There are many different type of ecomonies 14
  • 15. 15
  • 16.  The American Heritage® Dictionary of the English Language (2009), Fourth Edition, Houghton Mifflin Company. Retrieved September 9, 2013, from http://www.thefreedictionary.com  The Four Types of Economic Systems (2008), by Brian Coil, High School Teacher at Armstrong School District. Retrieved March 27, 2014, from http://www. slideshare.net 16
  • 17.  Alison: A New World of Free Certified Learning (2014). Retrieved March 26, 2014, from http://www.alison.com  Economics Online (Unknown). Retrieved March 27, 2014, from http://www.economicsonline.co.uk  Wikipedia: Economic System (2014). Retrieved March 27, 2014, from http://www.wikipedia.org 17