macro finance This is a topic that many people are looking for. thetruthaboutdow.org is a channel providing useful information about learning, life, digital marketing and online courses …. it will help you have an overview and solid multi-faceted knowledge . Today, thetruthaboutdow.org would like to introduce to you Financial Assets- Macro Topic 4.1. Following along are instructions in the video below:
“How are you doing econ students. This is mr. Clifford welcome to acdc econ right right now we are going to cover some vocabulary that you need to understand the sector. I am making this short video to help you differentiate between all these key terms.
Let s start with the very basic one there is a huge difference between income and wealth income is the amount of money that comes to individuals for doing their job. But wealth is the accumulated value of all their assets. An asset is something that you own that has value so for a student. Your car clothes your video game console are all examples of assets in addition to assets there s also liabilities liabilities are financial obligations that you have to pay so if you have a student loan or a car loan that s a liability now these examples i m using are for an individual.
But it also applies to businesses they too have assets and liabilities and so does the government let s talk about the government s income..
The government taxes individuals and businesses and gains tax revenue. If in a given year they spend less than their tax revenue. Then they have a budget surplus. But that hasn t happened much in the united states instead we run a budget deficit that s when annual government spending is greater than the tax revenue and that brings us to the difference between the deficit and the debt.
A budget deficit shows that the government is overspending in one year. But when you add all those budget deficits you come up with the debt. Which is right there yeah i know let s go back and talk about financial assets. One of the key terms that you are going to see is the idea of liquidity liquidity is how easy it is to convert assets to cash without losing time or money for example.
If your asset was a house that s not very liquid..
It takes a lot of time energy and money to turn around and sell a house there s 3 types of financial assets that i want to talk to about to help you understand the difference the first one are loans. Which is an agreement between lenders and borrowers now obviously when you lend money you expect to get something in return. And that is called an interest rate. You are going to be learning a whole lot about interest rates and using them when you learn about banking and monetary policy.
Now it s time for a question is a lone an asset or is it a liability well it depends are you lending. The money or are you borrowing the money so for the lender. It s an asset and for the borrower. It s a liability.
The second financial asset that you are going to see is the idea of bonds bonds are iou s issued by the government or businesses..
So for example if a business needs the money to buy some equipment. It can issue a bond and they promise to pay back that money. Plus. The interest rate to the person who bought the bond and that same process also applies to governments the last financial asset that i m going to talk about is the idea of stocks stocks are share of ownership in a company and unlike bonds.
It is not an iou you are actually a partial owner of that corporation and you are entitled to some of their profits now i bet you took this economics class expecting to learn a whole lot more about stocks. But unfortunately that s not really what we talk about although. The stock market fluctuates and goes up and down with the general economy. It is not really an economic indicator in general the stock market doesn t cause the economy to go up or down.
It reacts when it goes up or down..
Now that you have a general understanding of some of the key vocab. You are ready to move on to harder concepts in this unit. You are going to talk about money banking and something called monetary policy. If you like these videos make sure to subscribe also take a look at the next video.
That is going to explain the 3 functions of money and the unit playlist that has a bunch of videos. Explaining all the key concepts and all the key graphs. ” ..
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