Solution Manual for Better Business 3rd Edition by
Solomon Poatsy Martin
CHAPTER 2: ECONOMICS AND BANKING
g ; g; g ; g;
CHAPTER OPENER
g; g ;
Chapter g ; 2 g;covers g ; the g;fundamentals g ; of g;economics g ; ― g;how g;business g ; decisions g ; are g;shaped
g ; by g;supply g ; and g;demand g;and g;the g;degrees g;of g;competition.
Students g ; will g ; learn g ; how:
to g;interpret g ; key g;economic g ; indicators, g ; such g ; as g ; the g ; gross g ; national g ; product g ; and
g ; price g ; indexes. g;the g;government g ; can g;step g;in g;to g;control g ; business g ; cycle g ; swings
g ; through g ; taxation, g ; spending, g ; and g;monetary g;policy.
to g;understand g;the g;Federal g;Reserve, g;and g;how g;its g;actions g;influence g;the g;U.S. g;money g;supply.
DETAILED g ; LECTURE g ; OUTLINE
I. The g ; Basics g ; of g;Economics
A. Economics g ; Defined
1. So g;what g;is g ; economics?
a. Economics g ; is g;the g;study g ; of g;how g ; individuals g ; and g ; businesses g ; make g ; decisions g ; to
g;best g ; satisfy g;wants, g;needs g;and g;desires g;with g;limited g;resources.
b. There g;are g;two g;basic g;studies g;of g;economics: g;microeconomics g;and g;macroeconomics.
i. Microeconomics g ; is g;the g;study g;of g;how g;individual g;businesses, g ; households
g ; and g;consumers g ; make g;decisions g ; to g;allocate g;their g;limited g ; resources g ; in
g;the g;exchange g ; of g;goods g;and g ; services.
ii. Macroeconomics g ; is g;the g ; study g ; of g ; the g ; behavior g ; of g;the g ; overall g ; economy.
B. Different g;T ypes g;of g;Economic g;Systems.
1. What g;are g;the g;different g;types g;of g;economic g ; systems?
a. An g;economy g ; is g;a g;system g ; that g ; tries g;to g;balance g ; the g ; available g ; resources g ; of g ; a
g;country g ; against g;the g;wants g;and g;needs g;of g;consumers.
b. The g;world’s g ; different g ; economies g ; are g;classified g ; into g;three g;basic g;economic
g ; systems: g;planned g ; (or g ; controlled) g ; economies, g ; market g ; economies, g ; and
g ; mixed g ; economies.
i. In g ; a g;planned g ; economic g ; system, g ; the g ; government g ; plays g ; a g ;significant g ; role g ; in
,determining g ; the g;goods g;and g;services g ; that g;are g;provided g ; and g;how g ; they g ; are
g;produced g;and g ; distributed.
,a.) Under g ; communism, g ; the g ; government g ; makes g ; all g ; economic g ; decisions
g ; and g ; controls g;all g ; the g ; social g ; services g ; and g ; many g ; of g;the g ; major
g ; resources g ; required g ; for g ; the g;production g ; of g;goods g;and g ; services.
, b.) Socialism g ; provides g ; that g;the g;government g ; owns g;or g;controls g ; many g ; basic
g ; businesses g;and g ; services g ; so g;that g;profits g ; can g;be g;distributed g ; evenly
g ; among g ; the g ; people.
c.) Many g;socialist g ; and g;communist g ; countries g ; are g;beginning g ; to g;change g ; their
g ; economies g;into g;free g;market g;economies g ; through g ; privatization g ; – g;the
g;conversion g ; of g;government- g;owned g ; production g ; and g ; services g ; to g ; privately
g ; owned, g ; profit-seeking g ; enterprises.
ii. In g ; a g;market g ; economy, g ; individuals g ; are g ; able g ; to g ; make g ; their g ; own g ; economic g ; decisions.
Solomon Poatsy Martin
CHAPTER 2: ECONOMICS AND BANKING
g ; g; g ; g;
CHAPTER OPENER
g; g ;
Chapter g ; 2 g;covers g ; the g;fundamentals g ; of g;economics g ; ― g;how g;business g ; decisions g ; are g;shaped
g ; by g;supply g ; and g;demand g;and g;the g;degrees g;of g;competition.
Students g ; will g ; learn g ; how:
to g;interpret g ; key g;economic g ; indicators, g ; such g ; as g ; the g ; gross g ; national g ; product g ; and
g ; price g ; indexes. g;the g;government g ; can g;step g;in g;to g;control g ; business g ; cycle g ; swings
g ; through g ; taxation, g ; spending, g ; and g;monetary g;policy.
to g;understand g;the g;Federal g;Reserve, g;and g;how g;its g;actions g;influence g;the g;U.S. g;money g;supply.
DETAILED g ; LECTURE g ; OUTLINE
I. The g ; Basics g ; of g;Economics
A. Economics g ; Defined
1. So g;what g;is g ; economics?
a. Economics g ; is g;the g;study g ; of g;how g ; individuals g ; and g ; businesses g ; make g ; decisions g ; to
g;best g ; satisfy g;wants, g;needs g;and g;desires g;with g;limited g;resources.
b. There g;are g;two g;basic g;studies g;of g;economics: g;microeconomics g;and g;macroeconomics.
i. Microeconomics g ; is g;the g;study g;of g;how g;individual g;businesses, g ; households
g ; and g;consumers g ; make g;decisions g ; to g;allocate g;their g;limited g ; resources g ; in
g;the g;exchange g ; of g;goods g;and g ; services.
ii. Macroeconomics g ; is g;the g ; study g ; of g ; the g ; behavior g ; of g;the g ; overall g ; economy.
B. Different g;T ypes g;of g;Economic g;Systems.
1. What g;are g;the g;different g;types g;of g;economic g ; systems?
a. An g;economy g ; is g;a g;system g ; that g ; tries g;to g;balance g ; the g ; available g ; resources g ; of g ; a
g;country g ; against g;the g;wants g;and g;needs g;of g;consumers.
b. The g;world’s g ; different g ; economies g ; are g;classified g ; into g;three g;basic g;economic
g ; systems: g;planned g ; (or g ; controlled) g ; economies, g ; market g ; economies, g ; and
g ; mixed g ; economies.
i. In g ; a g;planned g ; economic g ; system, g ; the g ; government g ; plays g ; a g ;significant g ; role g ; in
,determining g ; the g;goods g;and g;services g ; that g;are g;provided g ; and g;how g ; they g ; are
g;produced g;and g ; distributed.
,a.) Under g ; communism, g ; the g ; government g ; makes g ; all g ; economic g ; decisions
g ; and g ; controls g;all g ; the g ; social g ; services g ; and g ; many g ; of g;the g ; major
g ; resources g ; required g ; for g ; the g;production g ; of g;goods g;and g ; services.
, b.) Socialism g ; provides g ; that g;the g;government g ; owns g;or g;controls g ; many g ; basic
g ; businesses g;and g ; services g ; so g;that g;profits g ; can g;be g;distributed g ; evenly
g ; among g ; the g ; people.
c.) Many g;socialist g ; and g;communist g ; countries g ; are g;beginning g ; to g;change g ; their
g ; economies g;into g;free g;market g;economies g ; through g ; privatization g ; – g;the
g;conversion g ; of g;government- g;owned g ; production g ; and g ; services g ; to g ; privately
g ; owned, g ; profit-seeking g ; enterprises.
ii. In g ; a g;market g ; economy, g ; individuals g ; are g ; able g ; to g ; make g ; their g ; own g ; economic g ; decisions.
