Financial economics, the definition of money and the definition of economics

 Definition of money

Money is the currencies that are used to buy services and goods, and money may be associated with the existence of a lot of wealth. [1] Money is defined as all the papers and coins used to buy things, and it is possible to save money by keeping it in bank accounts. [2] Other definitions of money are the means used by people to obtain multiple things, and money may be used in stock markets, or for the purpose of establishing various projects. [3]

Definition of economics

Economics (in English: Economics) is the cognitive science that deals with wealth, consumption and production. [4] Economics is defined as the studies that deal with the distribution of consumption of services and goods, and the well-being of people. [5] Other definitions of economics are the science that deals with tax issues, Business, financing, and production processes related to the sale, purchase, and distribution of products. [6]

The importance of money and the economy

Both money and economics are important in a person's life. Whether through individual transactions, or on the scale of major businesses related to companies, the following are a set of points that summarize the importance of money and the economy:

The importance of money

The importance of money has emerged as one of the most important inventions that humans have reached. Which led to money becoming a basic issue in the lives of all individuals in societies, and this importance is evident based on the following points: [7]

Money is one of the most important means that support the purchasing power of consumers, and it is the main component of income on which it depends in its monetary form, and also the economy sector relied mainly on money. Because of its role in controlling the nature of individuals' desires, and the amounts they want to obtain from goods and services.

The money supports the production process; Because it contributes to empowering the owners of establishments to take appropriate decisions regarding the priority of producing products or determining specific quantities of them.

Money is inherent in the specialization of work in the sense of the division of labor; Where there are many workers who are able to produce and work, and each of them gets his share of the products or the money wages; To be consumed or saved.

The importance of the economy

Economics is one of the most important sciences that have affected human life. It contributed to the emergence of many phenomena affecting the peoples of the world, and the importance of the economy is summarized according to the following points: [8]

Economics was associated with political science; Many political programs are created by means of an economic nature.

The economy contributed to enhancing security, prosperity, and stability for countries that have a wealthy economic sector.

The economy helped the diversified fields of business develop and flourish.

Branches of the economy

Economics is divided into two main branches: [9]

Microeconomics: It is a branch of economics that is concerned with the study of influences, phenomena, and micro-economic events, such as studying the economic behavior of individuals, such as product behavior, consumer behavior, or studying the economic situation of a city within a state. Firms according to microeconomics fall into the following categories:

Macroeconomic (in English: Macroeconomic): It is the second branch of economics, and it is concerned with studying influences, phenomena, and macroeconomic events, such as a country's gross domestic product, or aggregate supply and demand, and macroeconomics relied on adjusting general economic policies. In order to get rid of the negative effects of economic crises; Which contributes to achieving the stability and growth of the economy, and also the macroeconomic management has taken care of two types of economic policies, namely monetary policy and tax policy.

A company that makes an economic profit if the average total cost is less than the cost of any of the additional products that are produced, and this indicates that the company is located at the maximum point of production for profit.

The company that makes a natural profit if the economic profit is equal to zero, and this profit appears when there is an equalization between the average total cost and the maximum production point of the profit.

The company that reduces its losses if the price is between the variable average cost and the average total cost, and this thing requires the companies to continue their work; As the percentage of losses may increase in the event of stopping work.

The firm that should be closed if the price is below the average variable cost at the point of maximum profit production; Which contributes to reducing losses upon stopping work, as with increased production, the loss increases and the financial return decreases.

Areas of financing using money

The use of money within the business sector depends on a group of main areas that help enterprises finance their business, and the most important of these areas are: [10]

Post a Comment