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RESOURCE MARKETS: Market used to exchange the services of resources labor, capital, and natural resources. The value of services exchanged through resource markets each year is measured as national income. Compare financial market, product market.
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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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PERFECT COMPETITION, SHORT-RUN SUPPLY CURVE A perfectly competitive firm's supply curve is that portion of its marginal cost curve that lies above the minimum of the average variable cost curve. A perfectly competitive firm maximizes profit by producing the quantity of output that equates price and marginal cost. As such, the firm moves along its positively-sloped marginal cost curve in response to changing prices.
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BLACK DISMALAPOD [What's This?]
Today, you are likely to spend a great deal of time looking for a downtown retail store looking to buy either a dozen high trajectory optic orange golf balls or a large red and white striped beach towel. Be on the lookout for the happiest person in the room. Your Complete Scope
This isn't me! What am I?
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The New York Stock Exchange was established by a group of investors in New York City in 1817 under a buttonwood tree at the end of a little road named Wall Street.
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"Experience keeps a dear school, but fools will learn in no other. " -- Benjamin Franklin
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JET Journal of Economic Theory
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