Principles of Economics, 7th Edition (MindTap Course List)
7th Edition
ISBN: 9781285165875
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Question
Chapter 26, Problem 1QR
To determine
The role of a financial system and the different financial markets and intermediaries.
Expert Solution & Answer
Explanation of Solution
The system that allows the exchange of funds between the different sectors of the economy such as the lenders and the borrowers, lenders and the investors in the most possible form of the money, credit or the finance are known as the financial system. The financial system will operate under various levels in the economy such as the national levels and global levels etc. The main role of the financial system is to provide a matching between the savings of the one who have excess money to the
The stock markets are the markets that exchange the stocks in order to raise the capital for the investment purpose. The stock is the share of the firm and the stock provides the share of the ownership right to the one who holds it. The large corporate uses this sale of shares in order to raise the investment capital. The stocks provide the stockholders the share of the firm's profit and thus, they are known as the shareholders of the firm. The Bonds on the other hand is the certificate of indebtedness which guarantees the repayment of the loan amount after the maturity of the Bond and the payment of interest on the loan amount. The large corporations, federal government or other state or local governments uses to borrow with the help of the Bonds. The bonds provide interest to the bond holders.
The two different financial intermediaries are the banks and the Mutual funds. The bank accepts the deposits from the public and uses the deposits to create credit in the economy and to provide the loans to the borrowers. The Mutual funds sells the shares to the general public and uses the proceeds to buy a portfolio of financial assets.
Economics Concept Introduction
Concept introduction:
Financial system: The financial system is a system that allows the exchange of the funds between the lenders, investors and the borrowers through the medium of money, credit and finance etc.
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To determine the benefits of extending hours of operation for a food truck business, the couple should calculate additional revenue, break-even analysis, market demand, and raise prices. They should analyze competitors' prices and customer sensitivity to price changes, determine price elasticity, and test the strategy by implementing a slight price increase and monitoring sales closely.
If costs exceed revenues, the couple should analyze their financials, evaluate their business model, explore new revenue streams, and consider long-term viability. They should analyze their financial statements to identify high costs and areas for reduction, evaluate their business model based on market demand, and explore new revenue streams like catering, special events, or partnerships with local businesses.
Long-term viability is a key consideration, as if the business still operates at a loss after making adjustments, it may be necessary to consider shutting down. Staying in business should be…
Respond to following post.
You can charge higher prices if the parents think these are valuable by providing different services such as extended hours, healthy lunches, and smaller staff-to-child ratios. But pushing for prices much higher won’t make sense unless parents think the added value is worth the price hike. You should research your local parents to find out what they want.
If you want your business to be profitable, then focus on your strengths, do great work and have a reputation. Promote your special products and keep your prices low.
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Chapter 26 Solutions
Principles of Economics, 7th Edition (MindTap Course List)
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