TAILIEUCHUNG - Lecture Personal financial planning – Chapter 17: Background topics

The goals of this chapter are: Better apply key economic concepts, determine the contribution and regulation of major financial institutions, assess the advantages and disadvantages of alternative forms of business entities, recognize important concepts of business law. | Chapter 17 Background Topics Chapter Goals Better apply key economic concepts. Determine the contribution and regulation of major financial institutions. Assess the advantages and disadvantages of alternative forms of business entities. Recognize important concepts of business law. Demand and Supply Analysis The amount of output produced for any commodity is a function of the demand and supply for that item. In the simplest form, demand comes from the consumer. For example, consider the demand for a particular type of personal computer. A plot can demonstrate that demand varies with price; the lower the price, the greater the quantity demanded. At higher prices consumers will substitute. Demand and Supply Analysis, cont. An example of demand and supply curves are as follows: Demand and Supply Analysis, cont. Supply comes from businesses seeking to make the most money possible. The amount business will supply is a function of price; in this case, the greater the price, the greater the amount supplied. This is true because more profits are possible, at least up to the point at which costs per unit rise and ultimately exceed the benefits of higher prices. Equilibrium is set where quantity demanded is equal to quantity supplied. Inflation Inflation: The increase in price for a given good or service or the growth of overall costs in the economy over time. Inflation can be caused by any number of factors: Excess of demand for a good or goods as compared with the supply. Increases in the cost of items needed to produce a good. Lack of competition arising from few producers for that item and barriers to new companies entering the market. An excess supply of money in the economy. Inflation, cont. Inflation has been present in our economy from time to time since our country was first established. It has been omnipresent since World War II, as our government has placed more emphasis on limiting weak economic periods and maintaining high overall employment

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• Personal financial planning
• Personal financial
• Lecture Personal financial planning
• Financial planning
• Background topics
• Supply analysis
• Behavioral financial planning
• Behavioral life cycle theory
• Characteristics of finance
• Finance tools
• Cash flow planning
• Flow planning
• Special circumstances planning
• Divorce planning
• Planning process
• Behavioral finance
• Retirement planning
• Retirement assets
• Educational planning
• Establish educational goal
• Tax planning
• Income taxation
• Estate planning
• Identify assets
• Financial statements analysis
• Financial statements
• Financial investments
• Expected rate of return
• Financial leverage
• Interest rates
• Time value of money
• Present value