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MACROECONOMIC MARKETS: Three sets of markets that make up the macroeconomy--product, financial, and resource--which exchange the three primary types of macroeconomic commodities--gross production, legal claims, and factor services. The four macroeconomic sectors--household, business, government, and foreign--interact through these three sets of markets. The primary objective of macroeconomic theories is to explain activity that takes place in these three sets of markets.
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Lesson 18: Banking | Unit 4: Regulating Banks
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Page: 18 of 24
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Banking is a heavily regulated industry. Reasons: - First: Banks have the temptation to go for large profits at the expense of protecting deposits.
- Second: The economy's health rests with having the 'correct' money supply.
The problems: - Banks get carried away seeking profits without having enough deposit-protecting reserves.
- Customers can't withdraw deposits and lose trust.
- Banks shut down, remaining bank deposits become worthless, and the money supply shrinks.
- The economy heads into a recession.
Important points: - A failed bank is bad for the economy.
- Government can control the checking account part of money only by controlling and regulating banks.
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MARGINAL PRODUCT The change in the quantity of total product resulting from a unit change in a variable input, keeping all other inputs unchanged. Marginal product, usually abbreviated MP, is found by dividing the change in total product by the change in the variable input. Marginal product, which occasionally goes by the alias marginal physical product (MPP), is one of two measures derived from total product. The other is average product.
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ORANGE REBELOON
[What's This?]
Today, you are likely to spend a great deal of time going from convenience store to convenience store hoping to buy either storage boxes for your computer software CDs or a set of tires. Be on the lookout for rusty deck screws.
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General Electric is the only stock from the original 1896 Dow Jones Industrial Average remaining in the current index.
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"Plans are only good intentions unless they immediately degenerate into hard work." -- Peter Drucker, management consultant
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BOJ
Bank of Japan
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