Unit 1: Economic
Summary
Economics is the study of how people choose to use resources to improve their
well-being. Economics is the study of the production and consumption of good and
the transfer of wealth to produce and obtain those goods. There are two main types
of economics: macroeconomic and microeconomic. Microeconomics focuses on
the action of individuals and industries,like the dynamic between buyers and
sellers,borrowers and lenders. Macroeconomics,on the other hand,take a more
broader view by analyzing the economic activity of an entire country or the
international marketplace. There 3 economics theory: Adam Smith, Marxism and
Keynesian School. Studying economics can help one understand human thought
and behavior.
Comprehension questions
1. What do resources include?
→ Resources include the time and talent people have available,the
land,building,equipment and the other tools on hand,and the knowledge of
how to combine them to create usefull products and services.
2. What can be considered as important choose?
→ Important choose can be considered as how much time to devote to
work,to school,and to leisure,how many dollars to spend,how many to
save,how to combine resources to produce goods and services,and how to
vote and shape the level of taxes and the role of government.
3. What does the term “well-being” main?
→ Well-being includes the satisfaction people gain from the products and
services they choose to cunsume,from their time spent in leisure and with
family,and community as well as in jobs,and the security and services
provided by effective governments.
4. Why does economics reveal the way people and government behave?
→Because economics is a driving force of human interaction. It explains
how people interact within markets to get what they want or accomplish
certain goals.

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Unit 4 : Macroeconomics
Summary
Macroeconomics provides us with a bird’s eye view of country’economic
landscape. The goal of macroeconomics is to look at overall economic
trends such as employment levels, economic growth, balance of payments,
inflation and so on. Macroeconomics including monetary policy and fiscal
policy. The basic objective of these two main macroeconomic policies are to
promote economic growth and to keep inflation under control. Central banks
use monetary policy by increaseing or decreasing the money supply to keep
the economy from overheating or slowing down too quickly. Fiscal policy is
used by the government. Taxation and government spending greatly
influence a country’economic growth. Microeconomics different with
macroeconomics. Microeconomic is generally the study of individuals and
business decisions, Macroeconomic looks at higher up country and
government decisions. However,they are actually interdependent and
complement one another since there are overlapping issues between 2 fields.
Comprehension questions:
1. What are two major macroeconomic policies?
→ Two major macroeconomic policies are moneraty policy and fiscal
policy.
2. What are the main tools of monetary policy?
→ Monetary policy which controls a nation’s money supply is supervised
3. What are the main tools of fiscal policy?
→ Fiscal policy which controls a government’s revenue and spending.
Unit 5: Demand and supply
Summary
Demand describes how price influences buyer behavior. If the price of a specific
good or service increases,the quantity demand will decrease. If the price
decreases,the quantity will increase. So,we must hold all the other possible

Unit 6 : Public finance
Summary
The federal government raises trillions of dollars in tax renenue each year,though
there are many different kinds of taxes as: individuals income taxes,payroll
taxes,corporate income taxes,customs duties and excise taxes. Income taxes and
corporate are designated as federal funds,while payroll taxes become trust funds. If
the federal government spends more than revenues,the Treasury borrows money by
issuing bonds. To finance the debt,the U.S Treasury sells bonds and other types
securities. The federal debt is the sum of the debt held by the public,this is “debt
held by federal accounts” . So,the government owes to all its creditors in the
general public and foreign investors and central banks of other countries.
Comprehension questions:
1. What does the U.S Treasury do when revenue from taxes is not enough
to cover all of the government’s expenditures?
→ When revenue from taxes is not enough to cover all of the government’s
expenditures,the U.S Treasury borrows money to make up the difference.
2. How much is the Federal government going to collect in tax revenues in
fiscal year 2014?
→ The Federal government going to collect in tax revenues in fiscal year
2014 are projected to be $3 trillion.
3. What type of taxes contributes the largest proportion of tax revenues?
→Taxes contributes the largest proportion of tax revenues is individual
income.
4. What are federal funds?
→ Federal funds are income taxes and corporate taxes.
5. For what purpose are these funds used?
→Congress and the president conduct and the annual appropriations
process.
6. What are the trust funds?
→ Trust funds are payroll taxes.

tends to grow
2. What is deficit spending? Is it useful or harmful for the economy?
Why?
→ Deficit spending obtained by borrowing and printing instead of
taxation-can be helpful for the economy.
3. What are the government’s major economic policies mentioned
above?
→ The government’s major economic policies mentioned above are
Fiscal policy and Monetary policy.
4. What are they aimed at?
→ They are aimed at maintaining economic growth,high employment
and slow inflation.
5. Under what circumstances can fiscal policy be expansionary? Why?
→ F.P is expansionary when a government fells its economy is not
growing fast enough or unemployment is too high.
Because, when increasing spending or cutting taxes,the government
leaves individuals and businesses with more money to purchase good or
invest in new equipment,so raise demand,which requires additional
production,creating jobs,generating more spending. The result is higher
employment and a growing economy.
6. Under what circumstances can fiscal policy be contractionary? Why?
→ F.P is contractionary when inflation is high
Because, a contractionary F.P reduce the amount of money in the
economic available for puchasing,goods.
7. What factors should be considered in making decisions on the F.P?
→ Factors should be considered in making decisions on the F.P include:
the level of economic growth of unemplyment likely in the future; whether
or not to run a budget deficit by spending more money than the
government raises;political considerations;fiscal policies of other
countries and by the requirements of IMF.

redistributed in advance.
3. Why are people willing to pay an insurance premium?
→ Because they find the possibility of suffering a large loss
unpleasant to contemplate.
Unit 11 : Money and its functions
Summary
Money is a commodity accepted by general consent as a medium of exchange,
which serves as a medium of exchange, a measure of or an unit of account, a store
of value and a standard of deferred payments. Money has 2 main types:
commodity money (Its value is equal to the value of contained materials) and
token money (its value exceeds the cost of production or value in uses other than as
money).
Comprehension questions :
1. What is the concept of “money”?
→ Money is a commodity accepted by general consent as a medium of
exchange.
2. What are the functions of money?
→ The functions of money are medium of exchange, measure of value, store
of value, and standard of deferred payments.
3. What is a medium of exchange?
→ A medium of exchange is anything that is widely accepted in payment for
goods and services and in settlement of debts.
4. How is money used as a medium of exchange?
→ Money is used as a medium of exchange which exchange goods &
services?
5. How is money used as a unit of account?/a store of value and as a
standard of deferred payment?
→ Money is used as a unit of account as we need measurements for
distances,weights,& energy,so we need measurements for the value of things
offered at the market.

→ The reserve requirement play a central role in how much money banks
have to lend out.
6. What is the second tool of monetary policy?
→ The second tool of monetary policy is Discount rate.
7. What is the discount rate?
→The discount rate is the rate of interest the Fed charges for those loans.
8. How can the central bank shift aggregate demand?
→ The central bank can shift aggregate demand by making more or less
money available.
9. How can the banks encourage people to borrow and spend more
money?
→ The banks can encourage people to borrow and spend more money by
offering lower interest rates or easier approvals.
10. When will prices begin rising?
→ As market participants bid against each other for increasingly scarce
goods, prices will start rising.
11. What can the central bank do to reduce aggregate demand?
→ The central bank can reduce the money supply by: raising reserve
requirements, increasing the discount rate,or selling bonds in the open
market.
12.When might the central bank want to reduce the money supply?
→ The central bank might want to reduce the money supply when an
overheating economy.
Unit 14 : The foreign exchange market
Summary
The foreign exchange market is an over-the-counter market,the primary
communication instruments being the telephone and the computer. The
foreign exchange market enables banks and international corporations to
trade foreign currencies in large amounts. Foreign exchange trading is
divided into spost and forward business. There are 3 types of participants in

Unit 15 : Functions of financial markets
Summary
The main function of financial markets is to provide capital from surplus
funds to shortage funds. There are several categorizations of financial
markets. A firm or an individual can obtain funds in a financial market in
two ways, they are debt and equity markets. Secondly, we have primary
markets and secondary markets. Secondary markets can be organized in 2
ways: exchanges market and over – the – counter – market. Finally, on basis
of the maturity of the securities, they are money market and capital market.
Comprehension questions:
1. What is the main function of financial markets?
→The main function of financial markets is channeling funds from
households, firms, and governments that have saved surplus funds by
spending less than their income to those that have a shortage of funds.
2. How many categorizations of financial markets are mentioned in the
text?
→There are 4 categorizations of financial markets. They are Debt and
Equity Markets, Primary and Secondary Markets, Exchanges and Over-the-
counter Markets, Money and Capital Markets.
3. What is the debt market?
→The debt market is a financial market in which to issue a debt instrument,
such as a bond or a mortgage.
4. What is the equity market?
→The equity market is a financial market in which shares are issued and
traded.
5. What is a debt instrument?
→Debt instrument is a contractual agreement by the borrower to pay the
holder of the instrument fixed dollar amounts at regular intervals until a
specified date.
6. Do shareholders of a corporation receive fixed dollar amounts at regular