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HOUSEHOLD: The consuming population of an economy, which pretty much includes every living, breathing human being in a nation. The key contrast here is with business, the organizations responsible for production. In terms of the circular flow, households buy production from businesses through product markets and supply resources to business through factor markets. Check out the household sector for more.
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Lesson 11: Circular Flow | Unit 2: Financial Markets
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Page: 7 of 22
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Topic:
The Paper Economy
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Financial markets divert national income from household consumption to business investment.- Real side: Goods and resources, physical production used to satisfy wants and needs.
- Paper side: Legal claims on these physical goods and resources. Examples: Corporate stocks, government bonds, money, bank statements, mortgage contracts.
- Trading legal claims through financial markets diverts income from consumption to investment.
- A legal claim buyer gets the legal claim, but gives up income. The legal claim seller gives up the claim and takes possession of the income.
- Income is diverted from a legal claim buyer (lender, saver) to a legal claim seller (borrower) through the financial markets.Two additional flows: Saving and Investment.
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AUTONOMOUS NET EXPORTS Net exports by the foreign sector that do not depend on income or production (especially national income or gross domestic product). That is, changes in income do not generate changes in net exports. Autonomous net exports are best thought of as net exports that the foreign sector undertakes independent of income. They are measured by the intercept term of the net exports line. The alternative to autonomous net exports is induced net exports, which do depend on income.
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BEIGE MUNDORTLE
[What's This?]
Today, you are likely to spend a great deal of time at an auction wanting to buy either a remote controlled ceiling fan or a how-to book on home decorating. Be on the lookout for slow moving vehicles with darkened windows.
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The Dow Jones family of stock market price indexes began with a simple average of 11 stock prices in 1884.
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"We succeed in enterprises (that) demand the positive qualities we possess, but we excel in those (that) can also make use of our defects." -- Alexis de Tocqueville, Statesman
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AEC
Annual Equivalent Costs
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