IGCSE經(jīng)濟(jì)學(xué)課件(英文版)

IGCSE經(jīng)濟(jì)學(xué)課件(英文版)第一頁，共252頁。IGCSE?/OLevelEconomics1.1ThebasiceconomicproblemS1第二頁，共252頁。FactorsofproductionNaturalresources=landMan-maderesources=capitalHumanskillsandeffort=labourBusinessknow-how=enterprise第三頁，共252頁。Production

Usinginputs(resources)tomakeoutputs(goodsandservices)tosatisfytheneedsandwantsofconsumers第四頁，共252頁。Consumption

Usingupgoodsandservices(products)tosatisfyconsumers’needsandwants第五頁，共252頁。ThebasiceconomicproblemHumanwantsareunlimitedbutresourcesarescarce

第六頁，共252頁。So,weallhavetomakechoices

Thereisalimitedamountofresourcessuchasrawmaterials,machines,factoriesandskilledworkers.Butthereareanumberofdifferentwaysinwhichtheycanbeused.ResourceallocationthereforeinvolvesdecidinghowbesttousescarceresourcestosatisfyasmanyneedsandwantsaspossibleCHOICECHOICE第七頁，共252頁。ChoiceSimilarly,peopleandgovernmentsonlyhavealimitedamountofmoneybuthavemanyneedsandwantstosatisfy

$100

Food?Entertainment?Clothing?

Defence?Healthcare?Roads?$100bn第八頁，共252頁。OpportunitycostOpportunitycostisthecostofchoiceWhatwouldyoubuywithUS$10?HowshouldthegovernmentspendUS$250million?(Or,shouldthegovernmentcuttaxesbyUS$250million?)Whatoccupationwillyouchoosewhenyoufinishyourstudies?HowshouldanewbusinessinvestUS$20million?Shouldweconservemorenaturalresources?

…andwhatarethenextbestalternativesforegone?第九頁，共252頁。ProductionpossibilitycurvesAfirmproducingcarsandtrucksWhatistheopportunitycostofproducing20moretrucks?第十頁，共252頁。AneconomyproducingconsumergoodsandcapitalgoodsWhatistheopportunitycostofproducing15moretonnesofconsumergoods?Productionpossibilitycurves第十一頁，共252頁。Productionpossibilitycurves

Productionpossibilitycurves(PPCs)showthemaximumcombinedoutputoftwoormoreproductsafirmoranentireeconomycanproducewithitsavailableresourcesResourcesarebeingusedefficientlyiftheyareproducingtheirmaximumoutputBut,becauseresourcesarelimited,producingmoreofoneproductmeansproducinglessofanotherPPCsarethereforeausefulwayofshowingtheopportunitycostofproducingmoreofoneproductintermsofhowmuchofanothermustbegivenup第十二頁，共252頁。IGCSE?/OLevelEconomics

2.1EconomicsystemsS2第十三頁，共252頁。

ResourceallocationBecauseproductiveresourcesarescarcerelativetohumanwantswemustdecide:Whattoproduce?Howtoproduce?Whotoproducefor?Shouldweuseresourcestoproduceasmanyconsumergoodsaspossibleorallocatesomeresources,forexample,tobuildnewroadsortoprovidebetterhealthcare?Whattoolsandmachinerywillbeneeded?Howmanyworkerswillberequiredandwhatskillswilltheyneed?Isitcheapertoemploymorelabourormoremachinery?Shouldpeopleinthegreatestneedgetthegoodsandservicestheyrequire?Orshouldtheybeproducedforpeoplewhocanpaythemostforthem?Whatpriceshouldtheypay?第十四頁，共252頁。

Economicsystems

Whoinaneconomydecideswhatgoodsandservicestoproduce,howtoproducethemandwhotoproducethemfor,andhowarethesedecisionsaremade?MarketeconomyMixedeconomyPlannedeconomyWho?PrivatesectorfirmsandconsumersHow?ThepricemechanismWho?Privatesectorfirmsandconsumers,andagovernmentHow?ThepricemechanismandgovernmentplanningWho?GovernmentHow?Governmentplanning第十五頁，共252頁。

Economicsystems

ChinaCubaNorthKoreaDenmarkFranceItalySwedenUKManydevelopedeconomiesArgentinaMauritiusNepalParaguayBahamasSingapore第十六頁，共252頁。

Themarketeconomicsystem

PrivatesectorproducersConsumersGoodsandservicesMoneyProductionExchangeConsumptionInafreemarketeconomicsystemalldecisionsaretakenbyprivatesectororganizationsandindividuals.Thereislittleornoroleforgovernmentorapublicsectorandthereforelittleornotaxationorpublicspending.第十七頁，共252頁。Thepricemechanism

Amarketisanysetofarrangementsthatbringstogetheralltheproducersandconsumersofagoodorservicesothattheycanengageinexchange.PrivatefirmsproducegoodsandservicestomaximizetheirprofitsConsumersconsumegoodsandservicestomaximizetheirutility(satisfaction)AsconsumerdemandforaproductrisesProductionbecomesmoreprofitable,soproducersincreaseoutputProductionbecomeslessprofitable,soproducersreduceoutputMarketpriceandquantitytradedMARKETPRICERISESMARKETPRICEFALLSAsconsumerdemandforaproductfalls第十八頁，共252頁。What’sgoodaboutthemarketsystem?

AwidevarietyofgoodsandserviceswillbeproducedtosatisfyconsumerwantsFirmsrespondquicklytochangesinconsumerwantsandspendingpatternsTheprofitmotiveoffirmsencouragesthemtodevelopnewproductsandusethemostefficientmethodsofproductionTherearenotaxesProfitscanbeincreasedbyincreasingsalesand/orreducingcostsofproduction

Ifconsumerdemandisrising,

priceswillriseandproductionbecomesmoreprofitable.EntrepreneurswillallocateresourcestotheirmostprofitableusesThereisnopublicsectorina

totallyfreemarketeconomicsystem第十九頁，共252頁。

Howthemarketsystemcanfail

Marketfailure:whenfreemarketsfailtoproducegoodsandservicesthatareworthwhileorwhenthedecisionsofproducersorconsumersresultinwastefulorharmfulactivitiesFirmswillonlyproducegoodsandservicesiftheyareprofitableFirmswillonlysupplyproductstoconsumerswhoareabletopayforthemResourceswillonlybeemployedifitisprofitabletodosoNATIONALPARK第二十頁，共252頁。

Howthemarketsystemcanfail

Marketfailure:whenfreemarketsfailtoproducegoodsandservicesthatareworthwhileorwhenthedecisionsofproducersorconsumersresultinwastefulorharmfulactivitiesHarmfulgoodsmaybeproducedifitisprofitabletodosoSomeproducersandconsumersmayignoretheharmfuleffectsoftheiractivitiesonothersandtheenvironmentSomefirmsmayrestrictcompetition,misleadconsumersandchargethemveryhighprices第二十一頁，共252頁。

Themixedeconomicsystem

Inamixedeconomyagovernmentcaninterveneindifferentmarketsinanattempttocorrecttheworstmarketfailures:ItcanprovideusefulandessentialgoodsandservicesItcanprovidegoodsandservicesforpeopleinthegreatestneedItcanemploypeopleinpublicsectororganizationsandprovidefinancialsupporttoprivatesectorfirmstoboostoutputandemploymentItcanoutlawtheproductionofharmfulgoodsanddangerousactivitiesItcanoutlawbusinesspracticesthatrestrictcompetitionormisleadconsumers

第二十二頁，共252頁。

Themixedeconomicsystem

Amixedeconomythereforecombinestheadvantagesofamarketeconomic

systemwith:governmentownershipandcontrolofsomescarceresourcesgovernmentinterventionstoregulatetheactionsofprivatesectorfirmsandconsumersinsomemarkets第二十三頁，共252頁。

Howmixed?

第二十四頁，共252頁。Governmentintervention:someproblems

Bycorrectingfailuresinsomemarkets,agovernmentmaydistorttheallocationofresourcesandcauseproblemsinothers:HightaxesonpeopleandfirmscandistortmarketpricesignalsandreduceworkincentivesLandregulationscanincreaseproductioncostsandthereforereducetheprofitabilityandsupplyofsomegoodsandservicesPublicsectororganizationsmaybeinefficientandproducepoor-qualitygoodsandservicesbecausetheydonothavetomakeaprofitSomegovernmentspendingmaybeforpoliticalorevenpersonalgain第二十五頁，共252頁。IGCSE?/OLevelEconomics2.2HowmarketsworkS3第二十六頁，共252頁。Whatisamarket?Themarketforagoodorserviceconsistsofallthoseproducerswillingandabletosupplyitandallthoseconsumerswillingandabletodemanditdemandgoodsandservicesto

satisfytheirneedsandwantssupplygoodsandservicestoearnprofits第二十七頁，共252頁。Howmanyfizzydrinks?Ifcanswere$5eachManyproducersFewconsumersIfcanswere10centseachFewproducersManyconsumers第二十八頁，共252頁。DemandThewantorwillingnessofconsumerstobuyaproductTobeaneffectivedemandaconsumermusthaveenoughmoneytobuytheproductAspricerises,thequantitydemandedbyconsumerscontractsAspricefalls,thequantitydemandedbyconsumersextendsAdemandcurveslopesdownwards第二十九頁，共252頁。SubstitutesandcomplementsSubstitutescansatisfythesamewantComplementsareinjointdemandororor第三十頁，共252頁。MarketdemandThesumofallindividualconsumerdemandsforaparticularproductAriseindemandThemarketdemandcurveshiftsoutwardsPossiblecausesare:anincreaseindisposableincomesaftertaxariseinthepriceofsubstitutesafallinthepriceofacomplementtastesandfashionfavourtheproductanincreaseinadvertisingariseinthepopulationotherfactors,e.g.hotweatherincreasesdemandforcolddrinksandsuncreams第三十一頁，共252頁。MarketdemandThesumofallindividualconsumerdemandsforaparticularproductAfallindemandThemarketdemandcurveshiftsinwardsPossiblecausesare:afallindisposableincomesaftertaxafallinthepriceofsubstitutesariseinthepriceofacomplementtastesandfashionfavourotherproductsareductioninadvertisingafallinthepopulationotherfactors,e.g.hotweatherreducesthedemandforwindercoats第三十二頁，共252頁。No,iftheproductisaninferiorgoodAsincomerises,consumersbuylessastheyswitchtheirdemandtoothermorepreferableproductsYes,iftheproductisanormalgoodAsincomerises,consumersarewillingandabletobuymoreIncomeanddemandButwillariseinconsumerincomealwaysleadtoanincreaseindemandforaproduct?第三十三頁，共252頁。SupplyThewillingnessandabilityoffirmstomakeaproductavailabletoconsumersAspricerises,thequantitysuppliedbyproducersextendsbecauseproductionbecomesmoreprofitableAspricefalls,thequantitysuppliedbyproducerscontractsbecauseproductionbecomeslessprofitableAsupplycurveslopesupwards第三十四頁，共252頁。MarketsupplyThesumofallindividualproducers’decisionsaboutthesupplyofaparticularproductAriseinsupplyThemarketsupplycurveshiftsoutwardsPossiblecausesare:otherproductsbecomelessprofitabletoproduceafallinthecostoffactorsofproductionanincreaseinthesupplyofresourcestechnicalprogressandimprovementsinproductionprocessesandmachineryanincreaseinbusinessoptimismandexpectationsofprofitthegovernmentsubsidizesproductionand/orcutstaxesonprofitsotherfactors,e.g.goodweatherboostscropharvests第三十五頁，共252頁。MarketsupplyAfallinsupplyThemarketsupplycurveshiftsinwardsPossiblecausesare:otherproductsbecomemoreprofitabletoproduceariseinthecostoffactorsofproductionafallinthesupplyofresourcestechnicalfailures,suchasacutinpowersuppliesormechanicalbreakdownsafallinbusinessoptimismandprofitexpectationsthegovernmentwithdrawssubsidiesand/orincreasestaxesonprofitsotherfactors,e.g.warsandnaturaldisastersThesumofallindividualproducers’decisionsaboutthesupplyofaparticularproduct第三十六頁，共252頁。MarketequilibriumPriceperunitQuantitytradedperperiodDDSSEquilibriumquantitytraded(Qe)Marketprice(Pe)0AmarketisinequilibriumwheremarketdemandequalsmarketsupplyAttheequilibriummarketpricethequantityconsumerswishtobuyisexactlyequaltothequantityproducerswishtosellIfamarketisinequilibriumtherearenopressurestochangethemarketprice第三十七頁，共252頁。MarketdisequilibriumPriceperunitQuantitytradedperperiodDDSSPe0AmarketisindisequilibriumifthequantityconsumerswishtobuyisnotmatchedbythequantityproducerswishtosellP1P2AtpriceP1thereisanexcesssupply.Pricewillneedtofalltopersuadeconsumerstobuymoreandforproducerstocontracttheirsupply.AtpriceP2thereisanexcessdemand.Pricewillneedtorisetoreduceconsumerdemandandtoencourageproducerstosupplymore.第三十八頁，共252頁。AnincreaseinmarketpriceIfmarketdemandrisesORIfmarketsupplyfallsPriceperunitQuantitytraded0DSDD1D1SP1PQQ1Quantitytraded0DSDSP1Q1QPriceperunitS1S1P第三十九頁，共252頁。AdecreaseinmarketpriceIfmarketdemandfallsORIfmarketsupplyrisesPriceperunitQuantitytraded0D1SD1DDSPP1Q1QQuantitytraded0DS1DS1PQQ1PriceperunitSSP1第四十頁，共252頁。Howresponsiveisdemandtochangesinprice?$1percanNowonly90centsAfter…Before…Ifdemandisrelativelyelasticasmallchangeinpricecausesarelativelylargechangeinquantitydemanded第四十一頁，共252頁。Howresponsiveisdemandtochangesinprice?After…Before…asmallchangeinpricecausesonlyarelativelysmallchangeinquantitydemandedNow

only$2$2.20Ifdemandisrelativelyinelastic第四十二頁，共252頁。PriceelasticityofdemandHowresponsiveconsumerdemandistoachangeinprice,andthereforehowrevenuesmayrespondfollowingachangeinpricePercentagechangeinprice=$1/$5=20%Percentagechangeinpassengernumbers=5/100=5%Priceelasticityofdemand=20%/5%=4Percentagechangeinprice=$0.5/$2.00=25%Percentagechangeinpassengernumbers=10/50=20%Priceelasticityofdemand=20%/25%=0.8ELASTICINELASTIC第四十三頁，共252頁。Demandforaproductwillbepriceelasticif:Why?Because:theproducthasmanyclosesubstitutesconsumerscanbuyinsteadifthepricerises,e.g.differentwashingdetergentstheproductisexpensive,suchasmanyluxuryitems,soevenasmallincreaseinpricemaybeunaffordableconsumersdonotneedtopurchasetheproductfrequentlysotheyhavetimetosearchforalternativesifpricerisesPriceelasticityofdemand10%off%changeinquantitydemandedisgreaterthanthe%changeinprice>PED>1第四十四頁，共252頁。Demandforaproductwillbepriceinelasticif:Why?Because:theproducthasveryfewclosesubstitutesforconsumers,e.g.electricitytheproductisalow-costitem,e.g.adailynewspaperorboxofmatchestheproductisanessentialitemandneededregularly,e.g.manybasicfooditemssuchasbread,riceandvegetablesPriceelasticityofdemand10%off<PED<1%changeinquantitydemandedislessthanthanthe%changeinprice第四十五頁，共252頁。PriceelasticityofsupplyHowresponsiveproducersupplyistoachangeinpriceSupplyispriceelasticWhenthe%changeinquantitysuppliedisgreaterthan%changeinpricePES>1SupplyispriceinelasticWhenthe%changeinquantitysuppliedislessthanthe%changeinpricePES<1Forexample,ittakestimetogrowcornsosupplywillbecomemoreelasticovertime第四十六頁，共252頁。Indirecttaxescanbe

addedtothepricesof

goodsandservicesButwhydogovernmentswanttoincreasethepricesandrestrictthesupplyofsomeproducts?todiscouragetheirconsumptionbecauseitcanbeharmful,e.g.cigarettestoreducetheirproductionbecauseitcanbeharmful,e.g.theburningofoilandgasreleasesharmfulemissions

toconservelimitednaturalresources,e.g.taxesonenergyandwateruseSubsidiescanbepaidtoproducerstowardstheircostsofproductionButwhydogovernmentswanttoincreasethesupplyandreducethepricesofsomeproducts?tomakeproductsmoreaffordableforthoseonthelowestincomes,e.g.basicfoodstuffstoencouragetheirconsumptionbecauseitcanbebeneficial,e.g.medicinestoencouragetheirdevelopmentandproductionbecauseitisbeneficialandcreatesemployment,e.g.windturbinesandsolarenergypanelsTaxes,subsidiesandmarketoutcomes$10+5%tax第四十七頁，共252頁。TheeffectofanindirecttaxObjective:toreduceharmfulexhaustemissionsbythereducingtheconsumptionofpetrolBeforetaxof40centsperlitre:600millionlitresofpetrolaretradedeachmonthatthemarketpriceof80centsperlitreAftertaxof40centsperlitre:500millionlitresofpetrolaretradedeachmonthatanewmarketpriceof$1perlitreButwhydoesn’tthemarketpricerisefrom80centsto$1.20perlitre?Becausedemandcontractsaspricerises,sopetrolproducersenduphavingtopaysomeofthetaxtogovernment第四十八頁，共252頁。TheeffectofasubsidyObjective:toencouragetheproductionandconsumptionofbiofuelBeforeasubsidyof$20perbarrel:40millionbarrelsofbiofuelaresuppliedandtradedeachmonthatthemarketpriceof$60perbarrelAfterasubsidyof$20perbarrel:50millionbarrelsofbiofuelaresuppliedandtradedeachmonthatanewmarketpriceof$50perbarrelButwhydoesn’tthemarketpricefallfrom$60to$40perbarrel?Becausedemandextendsaspricefallssoproducersdonothavetopassonthefullamountofthesubsidy第四十九頁，共252頁。IGCSE?/OLevelEconomics2.3SocialcostsandbenefitsS4第五十頁，共252頁。

PrivatecostsandbenefitsPrivatesectorfirmsConsumersAimtomaximizetheirprofitsPrivatecosts=wages,rents,components,insurancepremiums,telephonebills,electricity,etc.Privatebenefits=revenuefromthesaleofproductstoconsumers

Aimtomaximizetheirutility(orsatisfaction)Privatecosts=paymentsforgoods

andservicesPrivatebenefits=satisfactionfromconsumingtheproductstheybuy第五十一頁，共252頁。Someproducersandconsumersmayignoretheharmfuleffectsoftheirproductionandconsumptiondecisionsandactivitiesonotherconsumers,firmsandtheenvironmentbecausetheyareonlyconcernedwiththeirownprivatecostsandbenefits

Marketfailure第五十二頁，共252頁。

Externalcosts第五十三頁，共252頁。

SocialcostsTotalsocialcost=privatecosts+externalcosts第五十四頁，共252頁。

Externalbenefits第五十五頁，共252頁。

SocialbenefitsTotalsocialbenefit=privatebenefits+externalbenefits第五十六頁，共252頁。

Aneconomicuseofresources?Iftotalsocialbenefit>totalsocialcostIftotalsocialcost>totalsocialbenefitEconomicwelfarecanbeimprovedbyreducingproductionandconsumptionEconomicwelfarecanbeimprovedbyencouragingmoreproductionandconsumption第五十七頁，共252頁。Taxonlandfilltoincreaseby20%asthegovernmentattemptstoreducetheamountofwastethatendsupintheground.

CorrectingmarketfailureHowcanagovernmentinamixedeconomyensurethatfirmsandconsumerstakeaccountoftheexternalcostsandbenefitsoftheirdecisionsandactions?IndiatoenforcenewregulationstocurbnoisepollutionSouthAfricabansplasticbagsto

reducelitterRetailerscaughthandingoutthebagsnowfaceafineof100,000rand($13,800)ora10-yearjailsentenceTheChinesegovernmentannounces18recyclingprojectsaretoreceivegovernmentsubsidiescoveringupto50%oftotalinvestmentcosts

TheAustraliangovernmenthasbannedlivecattleexportstoIndonesiauntilsafeguardsareadoptedtoendthebrutalslaughterofanimalsGovernmentunveilsplantotaxthecarbonemissionsoftheworstpolluters第五十八頁，共252頁。

CorrectingmarketfailuresToreduceexternalcostsRaisetaxesonfirmswithactivitiesthatcreateexternalcoststoreducethosefirms’after-taxprofits,e.g.taxesonemissionsfromtheuseoffossilfuels,onlandfillwasteandmineralextractionIncreaseindirecttaxesonproductsthatareconsideredharmfultoraisetheirpricesanddiscouragetheirconsumption,e.g.taxesoncigarettes,petrol,plasticbagsUseregulationsandfinestodiscouragetheproductionorconsumptionofproductsoractivitiesthatareharmful,e.g.smokingbans,planningcontrols,legallimitsonairandwaterpollutants,anti-litterlawsToincreaseexternalbenefitsEnsurepublicsectorprovisionofsociallyandeconomicallydesirablegoodsandservices,vidingfreevaccinationsandeducation,publicparks,publictransportandroadsProvidesubsidiestoprivatesectorfirmstoreducethecostofactivitiesandproductsthathaveexternalbenefits,e.g.subsidiesforrecycling,renewableenergy,organicfarmingUseregulationstoencouragefirmstochangetheirproductionmethods,e.g.rulestophaseouttraditionallightbulbstoencourageaswitchtolow-energylightbulbs,healthandsafetyregulations,animalwelfarelaws第五十九頁，共252頁。IGCSE?/OLevelEconomics3.1MoneyandfinanceS5第六十頁，共252頁。

Whydoweneedmoney?Toexchangeforthosegoodsandservicesweeachneedandwantbutareunabletoproduceforourselves,becausewearenotself-sufficient(individuallywecannotproduceeverythingweneedandwant)wespecializeinthosetasksandproductiveactivitieswearebestabletodoandthereforeneedtotradewithproducersofotherproducts第六十一頁，共252頁。

Barter

Barterinvolvesexchanginggoodsandservices,i.e.‘payment’foroneproductismadewithanotherProblemswithbarterare:findingsomeonetoswapwith(theremustbeadoublecoincidenceofwants)??howtoagreevalues(howmanyapplestoonecow,andhowmuchcheeseforoneapple?)第六十二頁，共252頁。

ThefunctionsofmoneyamediumofexchangeagoodstoreofvalueameasureofvalueameansofdeferredpaymentIOU$20Toovercometheproblemsofbarteramoneymustbe:

Prices第六十三頁，共252頁。

ChoosingagoodmoneyAgoodmoneymustbe:acceptabletoothersinpaymentforgoodsandservicesdurablesothatitisnotworndownordamagedeasilythoughfrequentuseportablesothatitiseasytocarryarounddivisibleintosmallerunitsandvaluesscarce,otherwiseifitisfreelyavailableitwillbeoflittleornovaluetoothers第六十四頁，共252頁。

Whatismoney?Notesandcoins+bankdepositsBankdepositsare‘nearmoney’becausetheycanbewithdrawntoprovidecashtomakepaymentsreasonablyquickly第六十五頁，共252頁。

FinancingeconomicactivityBankslendmoneytopeople,firmsandgovernmentorganizationstofinancetheirspendingStockcanbesoldonthestockmarkettoprovidelong-termfinanceforcompaniesandgovernments第六十六頁，共252頁。

ThebankingsystemBanksarefinancialintermediaries:theybringtogethercustomerswhowanttosavetheirmoneywithcustomerswhowanttoborrowit第六十七頁，共252頁。SAVINGMONEYBanksneedmoneytomakeloansBanksoffersaversinteresttoencouragethemtosavetheirmoneyinsavingsaccountsTheinterestrateisarewardforsavingmoneySaversmaybeofferedhigherinterestratesforlong-termsavings

Thepriceofmoney…istheinterestrate(expressedasa%perunitofmoney)Thebaserateofinterestinaneconomyissetbythecentralbankorthegovernment.Itistheratewhichthecentralbankwillchargebanksforlendingthemmoneyiftheyrunshortofcash.Forexample:toattractsavings,abankoffersitscustomersannualinterestof3%apersonwhosaves$1,000inasavingsaccountforoneyearwillreceive$30ininterestattheendofthatyear第六十八頁，共252頁。

ThepriceofmoneyForexample:asmallfirmborrows$10,000repayableinoneyeartheinterestrateis5%peryearthetotalrepayableattheendoftheyear=$10,500BORROWINGMONEYTheinterestrateisthecostofborrowingmoneyLendingmoneytopeopleandfirmsinvolvesadministrativecostsandrisksofnon-repayment.BanksmustcoverthesecoststomakeaprofitThelongerthetermoftheloanandthegreatertheriskofnon-repaymentthehighertheinterestratechargedInterestchargesalsocompensatebanksforpriceinflationwhichwillreducethevalueofthemoneytheyhavetiedupinloans第六十九頁，共252頁。

TheroleofacentralbankThecentralbankisatthecentreofthebankingsysteminmosteconomiesThemainfunctionofacentralbank

istomaintainthestabilityofthenationalcurrencyandthemoneysupply

TheBankofEnglandTHEBANKERS’BANKSupervisesthebankingsystemandregulatestheconductofbanksHoldstheaccountsofbanksandtransfersmoneybetweenthemIslenderofthelastresorttobanksiftheyrunshortofmoney第七十頁，共252頁。TheroleofacentralbankTheCentralBankofIndonesiaTHEGOVERNMENT’SBANKIssuesnotesandcoinsManagesthenationaldebtManagespaymentstoandfromthegovernmentManagesthenation’sgoldandforeigncurrencyreservesOperatesthegovernment’smonetarypolicy第七十一頁，共252頁。

IssuingstockStockisthenameusedtodescribemoneyraisedbyajointstockcompanyorcorporation,oragovernment.Jointstockcompaniessellsharestoraisepermanentcapital.Sharesneverhavetoberepaid.Thepeopleandorganizationsthatbuysharesbecometheownersorshareholdersofjointstockcompanies.Eachshareheldinacompanyentitlesitsownertoashareofanycompanyprofits.Thispaymentfromprofitsiscalledadividend.Agovernmentsellsloanstocksorbondstoraisemoneyforafixedperiodoftime,sometimesupto25yearsormore.Bondsarerepaidwithinterestattheendoftheirterm.第七十二頁，共252頁。

ThestockmarketAstockexchange,orbourse,isabusinessorganizationthatenablesindividuals,companiesandgovernmentstobuyandsellloanstocksandcompanysharesontheglobalstockmarket.Thestockmarketistheglobalmarketforthebuyingandsellingofnewandsecond-handgovernmentstocksandcompanyshares.Thestockmarketbringstogetherallthoseindividualsandorganizationswillingandabletobuystocksandsharesandallthoseindividualsandorganizationswillingandabletosellthem.第七十三頁，共252頁。Whyisthestockmarketimportant?Farfewerstocksandshareswouldbetradediftheindividualsandorganizationsthatboughtthemwereunabletosellthemonatafuturedatetootherinvestorssotheycouldgettheirmoneyback.Ifgovernmentsandcompaniescannotselltheirnewlyissuedstocksandsharestheywillbeunabletoraisethecapitaltheyneedtofinancetheiractivities.Therewillbelesseconomicactivity.Fewergoodsandserviceswillbeproduced.第七十四頁，共252頁。Whatdeterminesshareprices?ShareholdersarelikelytoreceivebiggerdividendpayoutsDemandforsharesintheAlphaCompanyincreasesThemarketpriceandquantityofsharestradedintheAlphaCompanyincreaseDivid