- •Харків. Вид. Хнеу, 2010
- •Харків. Вид. Хнеу, 2010
- •Introduction
- •Module 1. Basics of market economy Lecture 1. Basic economic terminology
- •1. Terminology
- •Economic resources
- •2. Economic reasoning
- •Choices made at the margin(край)
- •Three basic economic decisions
- •5. Economic forces
- •6. The role of theory in economics
- •Value judgments
- •Microeconomics and macroeconomics
- •8. Economics and other subjects
- •Lecture 2. Economic systems: capitalism, socialism and mixed economy
- •1. Evolving развитие Economic Systems
- •2. Socialism
- •3. Capitalism
- •Figure 2.1. The circular of income and expenditure in a market economy:
- •Specialization and Exchange обмен
- •4. Differences between soviet-style socialism and capitalism
- •Table 2.1 Capitalism’s and soviet-style socialism’s solutions to the three economic problems
- •5. Mixed Economy
- •Government and the Economy
- •Some modern models of mixed economy
- •6. Transition economy
- •Government price setting.
- •Passive macroeconomic policies.
- •7. Other classifications of economic systems
- •Lecture 3. Supply спрос and demand требование
- •1. Markets: purposes and functions
- •2. Demand
- •The Market Demand Curve and the Law of Demand
- •Table 3.1 a demand schedule for grade a eggs
- •Foundation for the law of demand:
- •Figure 3.2. Changes in demand
- •Figure 3.3. Changes in quantity demanded
- •3. Supply
- •The market supply curve and the law of supply
- •Table 3.2 a supply schedule for a eggs
- •4. The marriage of supply and demand (market equilibrium)
- •Lecture 4. Elasticity of supply and demand
- •1. Price elasticity of demand.
- •2. Price elasticity of supply.
- •1. Price elasticity of demand
- •Determinants of price elasticity of demand
- •3. The proportion of income consumers spend on the good.
- •2. Price elasticity of supply
- •Determinants of price elasticity of supply
- •Perfectly inelastic and perfectly elastic supply
- •Module 2. Basics of micro and macroeconomics Lecture 5. Business firm
- •3. Functions of business firms.
- •1. Terminology
- •Scale of production
- •2. Basic types of business enterprise
- •Pros and cons of corporate business
- •Other types of enterprises
- •3. Functions of business firms
- •4. Management
- •Lecture 6. Production, cost and profit
- •3. Variable costs, fixed costs, and total costs.
- •1. Production relationships
- •Period of Production
- •2. The law of diminishing marginal returns
- •Total product curve and marginal product curve
- •Average Product
- •3. Variable costs, fixed costs, and total costs
- •4. Measuring cost and profit
- •5. Normal profit and economic profit
- •Theories of profit
- •Profit as a pay for input
- •Table 7.1 Annual production possibilities for food and clothing
- •3. Law of increasing opportunity cost
- •4. Economic growth: expanding production possibilities
- •Lecture 8: Macroeconomics: economic growth, business cycles, unemployment, and inflation
- •2. Business cycles.
- •4. Inflation.
- •1. Economic growth and living standards
- •Productivity
- •2. Business cycles
- •Leading Indicators
- •3. Unemployment
- •Types of unemployment
- •4. Inflation
- •Types of inflation
- •Relationship between inflation and unemployment
- •Economic interdependence among nations
- •5. Macroeconomic policy
- •Types of macroeconomic policy
- •Lecture 9. Monopoly, oligopoly and competition
- •1. Monopoly
- •How monopoly is maintained: barriers to entry
- •2. Perfect competition
- •3. Monopolistic competition
- •Product differentiation
- •Price discrimination
- •4. Oligopoly
- •Concentration ratios
- •The competitive spectrum
- •1) Cartel.
- •Forming a cartel: directions and difficulties
- •2) Implicit Price Collusion.
- •3) Price war.
- •4) The Contestable Market Model.
- •5) Price leadership.
- •6) Price rigidity: the kinked demand curve model.
- •7) Entry-limit pricing.
- •A Comparison of Various Market Structures
- •Lecture 10. Money, banking and financial sector
- •2. The definition and functions of money.
- •1. Financial sector
- •Institutions and financial markets
- •Financial institutions
- •Types of financial Institutions
- •Financial Markets
- •Differences among Money Market Assets
- •The role of interest rates in the financial sector
- •References
- •Contents
Types of financial Institutions
1. Depository institutions, the first category, are financial institutions whose primary financial liability is deposits in checking accounts. This category includes commercial banks, savings banks, savings and loan associations (S&Ls), and credit unions. The primary financial liability of each is deposits.
For example, the amount in your checking account or savings account is a financial asset for you and a financial liability for the bank holding your deposit.
Commercial banks make money by lending your deposits (primarily in the form of business and commercial loans), charging the borrower a higher interest rate than they pay the depositor. Those loans from banks to borrowers are financial assets of the bank and financial liabilities of the borrower.
Savings banks and S&Ls handled savings accounts and mortgages; they were not allowed to issue checking accounts. Commercial banks were not allowed to hold or sell stock; they did, however, issue checking accounts. These restrictions allowed us to make sharp, clear distinctions among financial institutions. Changes in the laws have eliminated many of these restrictions, blurring the distinctions among the various types of financial institutions. Now all depository institutions can issue checking accounts.
2. Contractual intermediaries. The most important contractual intermediaries are insurance companies and pension funds. These institutions promise, for a fee, to pay an individual a certain amount of money in the future, either when some event happens (a fire or death) or, in the case of pension funds and some kinds of life insurance, when the individual reaches a certain age or dies. Insurance policies and pensions are a form of individual savings. Contractual intermediaries lend those savings.
3. Investment intermediaries provide a mechanism through which small savers pool funds to purchase a variety of financial assets rather than just one or two. An example of how pooling works can be seen by considering a mutual fund company, which is one type of investment intermediary.
A mutual fund enables a small saver to diversify (spread out) his or her savings (for a fee, of course). Savers buy shares in the mutual fund which, in turn, holds stocks or bonds of many different companies. When a fund holds many different companies' shares or bonds, it spreads the risk so a saver won't lose everything if one company goes broke.
This is called diversification – spreading the risks by holding many different types of financial assets.
A finance company is another type of investment intermediary. Finance companies make loans to individuals and businesses, as do banks, but instead of holding deposits, as banks do, finance companies borrow the money they lend. They borrow from individuals by selling them bonds and commercial paper.
Commercial paper is a short-term promissory note that certain amounts of money pins interest will he paid hack on demand.
4. Financial brokers are of two main types: investment banks and brokerage houses.
Investment banks assist companies in selling financial assets such as stocks and bonds. They provide advice, expertise, and the sales force to sell the stocks or bonds. They handle such things as mergers and takeovers of companies.
A merger occurs when two or more companies join to form one new company.
A takeover occurs when one company buys out another company.
Investment banks do not hold individuals' deposits and do not make loans to consumers. They are nonetheless financial institutions because they assist others in buying and selling financial assets.
Brokerage houses assist individuals in selling previously issued financial assets. Brokerage houses create a secondary market in financial assets, as we'll see shortly.