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FDI: The abbreviation for Foreign Direct Investment, this is the acquisition of controlling interest in foreign firms and businesses from one country in another country. FDI can also take the form of constructing factories, structures and equipment (or any form of physical capital) in foreign soil. FDI does not include foreign investment into the stock markets (portfolio investment). Most economists consider foreign direct investment more useful than portfolio investment since this last one is generally regarded as temporal and can leave the foreign country at the first sign of trouble. FDI on the other hand, is considered more durable and with larger economic (potential) benefits.
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Lesson Contents
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Unit 1: What It Is |
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Unit 2: Banking Details |
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Unit 3: Reserve Banking |
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Unit 4: Regulating Banks |
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Unit 5: The Economy | |
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Banking
In this lesson, we take a look at the role banking plays in the macroeconomy. Banking is most important to the study of macroeconomics because a substantial fraction of the economy's money supply is under the direct control of commercial banks (as opposed to government). Because government needs to control the money supply to promote business-cycle stability, they need to control banks control of the money supply. As such, we need to take a look at how banks operate, including how they issue the deposits that make up the money supply. - The first unit opens this lesson with an overview of banks and the banking system, including their role as financial intermediaries.
- Moving into the second unit, we take a closer look at the banking system, especially the four basic types of banks (banks, savings and loans, credit unions, and mutual savings banks) and the assorted assets and liabilities of a typical bank.
- The key banking principle -- fractional-reserve banking -- is then discussed in the third unit with a little story about Fred the Goldsmith.
- The fourth unit of this lesson discusses the why, how, and who of bank regulation.
- The fifth and final unit then examines the benefits and problems of fractional-reserve banking for the macroeconomy.
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ACCOUNTING PROFIT The difference between the revenue received by a firm and the explicit accounting cost incurred. This is the profit listed on a firm's balance sheet, appears periodically in the financial sector of the newspaper, and is reported to the Internal Revenue Service for tax purposes. While accounting profit is the "standard" designation of profit used in the business world, economists prefer to use economic profit
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WHITE GULLIBON
[What's This?]
Today, you are likely to spend a great deal of time watching infomercials trying to buy either a weathervane with a horse on top or a case of blank recordable DVDs. Be on the lookout for slow moving vehicles with darkened windows.
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This isn't me! What am I?
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The portrait on the quarter is a more accurate likeness of George Washington than that on the dollar bill.
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"Live in such a way that you would not be ashamed to sell your parrot to the town gossip." -- Will Rogers
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OSHA
Occupational Safety and Health Administration
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