Macro L1 Flashcards
Who are the key players in the economy?
- Government
- Consumers
- Producers
SMEs:
- Small and medium enterprises (50-250 ppl)
- Focus on domestic market rather than international market
- Most businesses are SMEs
Who are consumers?
Buyers of goods and services
Which economies rely on consumers more?
US and UK
What is Central Bank responsible for?
Setting interest rates
What is involved in a civil society?
- Trade unions
- NGOs
- Charities
- Academics
What are the methods for finance business?
1) Retained profit
2) Borrowing from financial institutions
3) Issuing shares
4) Issuing bonds
What is retained profit?
- Difference between revenue earned and the costs
- Savings that firms keep and do not distribute to their owners
Why do firms borrow from financial institutions?
- To fund investment
- To handle day to day operations
What are shares?
Financial assets that give one part ownership in a company
Why would someone want greater shares of a company?
- The greater the shares, the greater the control to take over the company
- Capital gains can be made
What are primary markets?
Shares are issued and investors pay directly to the company issuing the shares
What are secondary markets?
Shares bought from investors
How does issuing bonds work?
- Company issues bonds
- Investors purchase bonds
- These investors receive regular interest payments until the maturity date
- When the bond matures, they receive the cash in full
What are the key issues for the government and the economy?
- Economic growth (GDP)
- Employment
- Inflation
- Balance of Payments
