Introduction AEM1200, to Business Management
Wednesday 10/29 Economics Markets and capitalism Supply, demand and competition The government and economics The government and economics The banking system
Economics: The close supervision and management necessary to ensure adequate provisions to a community. Types of Economies Capitalism An economic system in which all or most of the factors of production and distribution are privately owned and operated for profit; Socialism A global system of social organization based on common ownership, democratic control, production for use and free access; Communism An economic and political system in which the state makes all economic decisions and owns all the major forms of production; Mixed economies Economic systems in which some allocation of resources is made by the market and some is made by the government. Adam Smith: Selfinterested efforts result in collective benefit; Uncoordinated markets result in optimal utilization of resources; Private property is a more powerful incentive than public coercion. Foundations of Capitalism: Right to private property; Right to own a business and to keep all of that business' profits; Right to freedom of competition; Right to freedom of choice; Right to obtain interest.
Types of Competition Perfect competition Monopolistic competition Oligopoly Monopoly Key Economic Indicators SUMMARY Gross Domestic Product (GDP) liberal democratic mixed economy is the most Unemployment Rate powerful engine of economic growth devised by humankind; Price Indexes Supply and demand determine the long-term Consumer Price Index(CPI) prices of goods, services ideas, and therefore Producer Price Index(PPI) determining the incentive to produce more or less of any one; Unemployment Governments play a major role in ensuring the Formal unemployment viability of an economy and in "safeguarding" it. Frictional The stability of the markets depends on the interlocking activity of the financial system, Structural including Cyclical Global institutions, including IMF, World Seasonal Bank, WTO, and "Global" banks Outsourcing National monetary systems Flexible employment Government regulatory policies Government's Role in Economics Enforces Rules/Regulations Provides Public Goods Transfers Payments Fosters Competition Contributes to Economic Stability Monetary policy, fiscal policy and national debt Central Banks National commercial banking systems
US Gov't Economic Tools Monetary Policy management of money supply Fiscal Policy management of taxes and government expenditures National Debt American Banking System Depository Commercial Banks Savings and Loan Associations/Thrifts Credit Unions
Nondepository Life Insurance Companies Pension Funds Brokerage Firms Finance Companies The International Monetary System International Monetary Fund An organization of 185 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty; World Bank A vital source of financial and technical assistance to developing countries around the world; World Trade Organization The WTO deals with the rules of trade between nations at a global or nearglobal level.