Class Notes - 9/15 Financial Intermediary an agent in...

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9/15 Financial Intermediary an agent in between the people who need money and the people have money , example: Goldman Sachs Bond a loan A school wants to build schools gets a 10 mill bond from government takes it to GS GS gets investors to invest in the schools the school eventually pays back the bond with interest so the investors make money, GS makes a percentage When the loan is more of a risk and more likely to default, the interest rates go up Unemployment how many people are unemployed in the labor force Labor force anyone who is 16 or older, has a paying job, or looking for a paying job, currently 155,000,000 people in the US Unemployment increased during recessions Patterns of Recessions some economists think: W? going down twice, double dippers U? goes down, stays down but eventually goes back up V? sharp increase, sharp decrease L? remain sluggish Unemployment is a lagging statistic behind the market even though things are getting better, the unemployment rate got worse because more people join the labor force when times are productive so the numbers that you are calculating from are increased, so the percent that doesn’t have jobs is decreased
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hiring for business doesn’t increase when coming out of a recession because they have either become more efficient lagging because it is one of the last things to recover Scarcity as long as there is a limit on something, there will always be a scarcity, you can’t have everything of everything How does economics relate to scarcity? Deciding what you are going to spend your time, money and resources on what to produce and what you won’t spend your time, money and resources on Economics is about deciding what to produce and how to distribute production and distribution What, how, to whom How to cope with scarcity who gets what and what “what” is in the first place Factors of production Land: primary factor of production (exists naturally), natural resources like water, coal, land Labour: primary factor, the effort put into making something Capital: secondary factor of production (does not exist naturally, people made) o Physical capital Buildings Tools Inventory unfinished and finished products that haven’t been sold yet o Human capital Knowledge that humans acquire that make them more expert at a task skills and education, theoretical and practical knowledge What are the benefits of the single secondary factor of production? - Capital most important factor o Saves time o Additional productivity o Additional knowledge o Potentially adds to GDP and to national income 9/16 Medicare: healthcare from the government from people who are 65 or Why are scarcity and opportunity cost related?
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Opportunity cost: the next b est alternative to what you are doing Exa mple: the opportunity cost of going to school is a day at the b e ach as you are missing a day at the b e ach. Decision m aking chart
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This note was uploaded on 09/21/2011 for the course ECON 100 taught by Professor Vrooman during the Fall '07 term at Vanderbilt.

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Class Notes - 9/15 Financial Intermediary an agent in...

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