FIN366 Market Participation Paper and Presentation

FIN366 Market Participation Paper and Presentation - Market...

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Market Participation Paper and Presentation Introduction The role of businesses in the economy is to bring jobs to those individuals that fuel the economy the most—consumers. Businesses have a role of indirectly building the economy. With that said in many ways, businesses are consumers themselves. So
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it is normally a two-fold responsibility placed on businesses to contribute their part. When the economy is doing well, you can normally tell by how well employment is doing. If people are employed, it is generally a sign of a healthy economy. The other way around and it is a sign of troubling times. Money Markets When it comes to the government, the government can help or hinder job economic growth through raising taxes and adjusting government spending. Normally government spending can help an economy by jump starting it. Most recently we have seen this tactic fail. So it is safe to say that it does not always work, but nonetheless is a tool for economic growth. On one side of politics it is believed that a government that spends too much hinders economic growth as with the spending normally comes higher tax rates on certain individuals, which halt economic growth through more conservative stances by those companies taxed. The opposite is that spending puts money into the pockets of those companies and businesses that have the power to open up jobs and opportunities to the consumers of the world. Institutional investors’ role in the economic system is to some extent very indirect, yet impacting. Institutional investors are banks, insurance companies, pensions and more. Thinking of the banks, they help put money back into the system and indirectly control corporations through controlling stock. So in one statement, their role is to act as highly specialized investors for other individuals. Individuals are probably the most direct contributors to the economy of them all. Individuals or who are also known as consumers, are the driving force of any economy. These are the people who constantly put money back into the system. Through every purchase, they keep the economy going. The more they spend the
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better for the economy. The idea is to keep individuals spending so that the economy can grow. This is attained through employment and advancement opportunities in employment among other things. Stock Markets The stock markets offer an avenue for large, well established businesses and government units to raise capital to finance their investment or growth activities. On the other hand small businesses and individuals usually borrow from banks because they are too small to sell stocks or bonds (Mankiw, 2008). Many private businesses have raised capital via sale of stocks. For example Google which went public in 2004 by offering 19,605,052 shares at a price of $85 per share (Google Inc, 2004). Unlike
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FIN366 Market Participation Paper and Presentation - Market...

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