Introduction to Business Module Federal Reserve Monetary Policy Market - PowerPoint PPT Presentation

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Introduction to Business Module Federal Reserve Monetary Policy Market

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  1. Introduction to Business Module Federal Reserve Monetary Policy Market Computer Industry Returns Market MSFT (Microsoft) Price Level Market

  2. What Is a Market? • Two or more individuals, groups, or both, who come together to make exchanges. They are often referred to as a Buyer and Seller.

  3. How, What and When Do They Exchange? They Exchange? • Resources with differing levels of scarcity • Different combinations of exchanges • What roles can participants play in the exchange? • Types of Markets Topics

  4. Resources With Differing Levels of Scarcity • Physical goods, such as, Soap and Cars • Services, such as, Haircuts and Checking Accounts • Money

  5. Different Combinations of Exchanges (1) Goods for Goods • Bartering, such as, a farmer who trades fruit grown on their farm for wine produced by another farmer • Countertrade, such as, Ford Tractors traded for commodities, such as, wheat, hemp, or other industrial products


  6. Different Combinationsof Exchanges (2) Goods for Money & $$$ for Goods • Purchasing household products from Walmart • Selling your car in the classified advertisements

  7. Different Combinations of Exchanges (3) Services for Money Money for Services • Purchasing phone service from MCI • Repairing a neighbors car for money

  8. Different Combinations of Exchanges (4) Promises for Money Money for Promises • Paying money for car insurance in exchange for a promise by the seller to compensate you for loss or damages to your car • Receiving money from a lender (Student loans), in exchange for your promise to repay the loan plus interest, some time in the future

  9. Different Combinations of Exchanges (5) Money for Money • While visiting Paris, exchanging U.S. Dollars for French Francs

  10. What Roles Can Participants Play in the Exchange? • Buyer or Seller • Rule Maker

  11. The Role of Buyers and Sellers Price Setter or Price Taker • Because of the scarcity of the resource, when purchasing gasoline, the buyer is a price taker and the gas company is a price setter • What are the roles of Shaq and the Los Angeles Lakers?

  12. The Role of the Rule Maker Rule makers set the ground rules for a particular market and its transactions • NASD and its members • SEC in the securities market

  13. Types of Markets • Legal and Illegal Markets • Real and Virtual Markets • 24/7 and Time Limited Markets

  14. Legal and Illegal Markets • Purchasing a prescription drug from your local pharmacy • Purchasing cocaine from a drug dealer

  15. Real and Virtual Markets • Purchasing your textbook at your college bookstore • Purchasing your textbook at Amazon.com

  16. 24/7 & Time Limited Markets • Purchasing your textbook at Amazon.com at anytime of day and any day of the week • Auctions, such as, eBay, where the timeframe to participate or complete the transaction is limited and expires

  17. Markets of Interest Labor • Rules created by legislation, such as, minimum wage laws, child labor laws, Equal Employment Opportunity Laws (e.g. ADA) • Organized labor sellers

  18. Markets of Interest Land • Rules intensive, attorney or realtor involved • Land is scarce and unique • There are no substitutes

  19. Markets of Interest Exchange Rates • Market Players include: • Individuals purchasing and selling foreign currency • Multi-national Corporations, such as Ford, who periodically need to repatriate foreign currency into US Dollars • Large global banks • Governments who enter the exchange to strengthen or devalue a currency

  20. Markets of Interest • Capital and Financial • Stocks and Bonds

  21. Markets of Interest Other Financial Markets • Commodities • Spot Market and Futures Market • IEM

  22. Conclusion Other Financial Markets • Commodities • Spot Market and Futures Market • IEM

  23. What is The Iowa Electronic Market (IEM) • The IEM is an on-line, computerized market • Contracts are based on real-world events • A research tool • A teaching tool • Open to academic community

  24. IEM Resources IEM Introduction PowerPoint Presentation http://www.biz.uiowa.edu/iem/trmanual/introIEM.ppt IEM Traders Manual http://www.biz.uiowa.edu/iem/trmanual/ WebExchage Users’ Guide http://iemweb.biz.uiowa.edu/webexmanual/