Investment Funds in Canada (IFIC) -
Chapter 3 fully solved
What is economics?
Economics is fundamentally about understanding the choices individuals make and how the sum of
those choices determines what happens in our market economy.
What does market economy describes?
All of the activities related to producing and consuming goods and services, and how the decisions made
by individuals, firms, and governments determine the proper allocation of resources.
The interaction between consumers and the economy
The interaction between consumer choices and the economy takes place in an organized market and at a
price determined by demand and supply for goods and services by consumers, investors, and
governments.
Buyers vs. Sellers of Securities
The buyer believes it will go up in value and seller believes it will go down.
Economics Divided into Two Main Areas. What are those?
- Microeconomics
- Macroeconomics
Describe Microeconomics.
,It analyzes:
- The market behaviour of individual consumers and firms
- How prices are determined,
- How prices determine the production,
- Distribution,
- Use of goods and services.
What are the questions "Microeconomics" looks to answer?
- How do minimum wage laws affect the supply of labour and company profit margins?
- How would a tax on softwood lumber imports affect the growth prospects in the forestry industry?
- If a government placed a tax on the purchase of mutual funds, will consumers stop buying them?
Describe Macroeconomics
It focuses on the performance of the economy as a whole. It looks at the broader picture and to the
challenges facing society as a result of the limited amounts of natural resources, human effort and skills,
and technology.
Difference between Microeconomics and Macroeconomics
Whereas Microeconomics looks at how the individual is impacted by changes in prices or income levels,
macroeconomics focuses on such important issues as unemployment, inflation, recessions, government
spending and taxation, poverty and inequality, budget deficits and national debts.
What are the questions "Macroeconomics" looks to answer?
- Why did total output shrink last quarter?
- Why have the number of jobs fallen in the last year?
- Will a decrease in interest rates stimulate economic growth?
, - How can a nation improve its standard of living?
Who are the main decision makers in an economy?
- Consumers: Set out to maximize their satisfaction or well-being
- Firms: Set out to maximize profits by selling their goods or services to consumers, governments or
other firms
- Governments: Spend money on education, health care, employment training and the military. They
oversee regulatory agencies, and they take part in public works projects (highways, hydro-electric plants,
and airports).
Describe Market
A market is any arrangement that allows buyers and sellers to conduct business with one another.
What are the Factors of Production?
Land, Labour, Capital, Entrepreneurial Abilities
Who is included in market demand?
consumers/all purchasers of goods and services
Who is included in market supply?
suppliers of goods and services
Chapter 3 fully solved
What is economics?
Economics is fundamentally about understanding the choices individuals make and how the sum of
those choices determines what happens in our market economy.
What does market economy describes?
All of the activities related to producing and consuming goods and services, and how the decisions made
by individuals, firms, and governments determine the proper allocation of resources.
The interaction between consumers and the economy
The interaction between consumer choices and the economy takes place in an organized market and at a
price determined by demand and supply for goods and services by consumers, investors, and
governments.
Buyers vs. Sellers of Securities
The buyer believes it will go up in value and seller believes it will go down.
Economics Divided into Two Main Areas. What are those?
- Microeconomics
- Macroeconomics
Describe Microeconomics.
,It analyzes:
- The market behaviour of individual consumers and firms
- How prices are determined,
- How prices determine the production,
- Distribution,
- Use of goods and services.
What are the questions "Microeconomics" looks to answer?
- How do minimum wage laws affect the supply of labour and company profit margins?
- How would a tax on softwood lumber imports affect the growth prospects in the forestry industry?
- If a government placed a tax on the purchase of mutual funds, will consumers stop buying them?
Describe Macroeconomics
It focuses on the performance of the economy as a whole. It looks at the broader picture and to the
challenges facing society as a result of the limited amounts of natural resources, human effort and skills,
and technology.
Difference between Microeconomics and Macroeconomics
Whereas Microeconomics looks at how the individual is impacted by changes in prices or income levels,
macroeconomics focuses on such important issues as unemployment, inflation, recessions, government
spending and taxation, poverty and inequality, budget deficits and national debts.
What are the questions "Macroeconomics" looks to answer?
- Why did total output shrink last quarter?
- Why have the number of jobs fallen in the last year?
- Will a decrease in interest rates stimulate economic growth?
, - How can a nation improve its standard of living?
Who are the main decision makers in an economy?
- Consumers: Set out to maximize their satisfaction or well-being
- Firms: Set out to maximize profits by selling their goods or services to consumers, governments or
other firms
- Governments: Spend money on education, health care, employment training and the military. They
oversee regulatory agencies, and they take part in public works projects (highways, hydro-electric plants,
and airports).
Describe Market
A market is any arrangement that allows buyers and sellers to conduct business with one another.
What are the Factors of Production?
Land, Labour, Capital, Entrepreneurial Abilities
Who is included in market demand?
consumers/all purchasers of goods and services
Who is included in market supply?
suppliers of goods and services
