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WEALTH OF NATIONS, THE: Officially titled "An Inquiry into the Nature and Causes of the Wealth of Nations", this book written by Adam Smith and published in 1776, is considered to be the foundation for the modern study of economics. The Wealth of Nations was the first to combine assorted economic discourse and analyses into a single book. One of its most important themes is the efficiency of free trade and market exchanges unrestricted by government that leads to macroeconomic full employment and microeconomic efficiency. The Wealth of Nations is one of the most famous books worldwide. It continues to provide economic insight over two hundred years after its initial appearance.
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Lesson 9: Macro Basics | Unit 1: The Macroeconomy
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Page: 1 of 16
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Let's start with a definition: An economy is an interactive system of production, distribution, and consumption of resources, goods, and services that addresses the basic economic problem of scarcity. - Economic functions are divided into four basic macroeconomic sectors:
- Household: the consumers.
- Business: the producers.
- Government: the regulators and taxers.
- Foreign: the others.
The household sector of the macroeconomy is everyone in an economy who consumes goods and services.- Consumption is the use of natural resources, goods, or services to satisfy wants and needs.
- In a complex economy, consumption is expenditures by the household sector for the purchase of final goods and services.
- Household sector is a term that indicates the consuming, wants-and-needs-satisfying population. Everyone in society is included in the household sector.
The household sector is responsible for consumption.The business sector of the macroeconomy produces the goods and services that are consumed by the household sector. - The business sector is responsible for production by combining the four basic resources: labor, capital, land, and entrepreneurship.
- A business is a method of combining resources for production.
- While the business sector buys raw materials, intermediate goods, and other things. The most important purchase of the business sector is capital goods, or investment in capital.
The business sector is responsible for capital investment.The government sector affects resource allocation and production by imposing laws and regulations that force decisions not otherwise made. - Three levels of government: Federal, State and Local.
- The government sector collects taxes and buys a share of the economy's production, termed government purchases. These are goods such as national defense, highway and street construction, education, and police protection.
- Government purchases do not include transfer payments (Social Security benefits, welfare or unemployment compensation).
The government sector is responsible for government purchases.Economic activity is divided into domestic, everything within the political boundaries of a nation, and foreign, everything outside the boundaries. - Any citizen of the U.S., any firm owned by a U.S. citizen, and the government of any U.S. city are part of the domestic economy.
- Any resident, business or government of another country is part of the foreign sector.
- Exports are goods purchased by the foreign sector that are produced by the domestic economy.
- Imports are goods purchased by the domestic economy that are produced by the foreign sector.
- Net exports are the difference between exports and imports, or exports minus imports.
The foreign sector is responsible for net exports.
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REPURCHASE AGREEMENTS Short-term loans in which borrower sell assets to lenders with the agreement to purchase the assets at a later time a higher price. The assets most commonly sold are short-term U.S. Treasury securities and the higher price includes an interest payment on the loan. Repurchase agreements, also termed repos, are commonly used by the borrowers (that is, the sellers) to acquire short-term liquidity without foregoing the longer term investment returns from the assets. Repurchase agreements, along with other institutional investment near monies, are added to M2 to derive M3.
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GREEN LOGIGUIN
[What's This?]
Today, you are likely to spend a great deal of time strolling through a department store wanting to buy either a wall poster commemorating the first day of winter or blue cotton balls. Be on the lookout for strangers with large satchels of used undergarments.
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The earliest known use of paper currency was about 1270 in China during the rule of Kubla Khan.
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"Be civil to all; sociable to many; familiar with few; friend to one; enemy to none. " -- Benjamin Franklin, statesman
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AFBD
Association of Futures Brokers and Dealers (UK)
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