A Short Summary Of Our Economy
Everyday on the news we hear about the economy
. Sometimes it sounds like a whole other language. But with a five minute lesson in economics, maybe you can feel a little more confident in your place in the economy. Whether you're the owner of a fledgling business looking into recovery audits or a dad trying to pay the electric bill, knowing some basic concepts can ultimately help you out. Everyone is an active participant in the economy, whether they realize it or not.
Simply put, an economy is the buying and selling of goods and services. This includes getting your hair cut or buying a lemonade from the girl on your street. Many areas of our lives depend on the state of the economy, and there are an uncountable amount of factors that influence our economy. One way we can gain a better understanding is by taking a look at the stock market. The stock market is a public domain where people, usually represented by a professional stock broker, trade stocks. Stocks are pretty complicated, but essentially, they are just pieces of ownership that you hold in a company. The whole point is to buy stocks, hold on to it for a period of time, and sell it back for more than you bought it. The New York Stock Exchange, or the NYSE, is where this trading takes place.
While ordinary people can greatly benefit from a successful investment, it's generally the business itself that reaps the most rewards. With another source of revenue, the business can increase it's profit, which it then uses to hire additional workers, create better products, and invest in more efficient ways to create the product. These results add up to allow a business to grow and become more successful in the economy.
A business is the product of the economy, and the economy is a product of businesses. The basic idea of a business is generally a cycle. An owner purchases supplies from a supplier, they create a service or assemble a product, then they sell their good or service, earn money, which they then use to start the cycle over again. The ideal outcome is that the business continues to grow and become more successful, supplying the owner with more profit.
Even if you aren't a business owner, you are actively participating in the economy. You most likely pay an internet bill, a cell phone bill, and various other utility bills. These bills are a form of accounts payable. Applied to both business owners and home owners, an accounts payable is simply the record of money you owe to various companies. On the otherhand, the companies you owe money to have an accounts receivable. While keeping track of your home bills may seem easy, business owners have much more on their hands. Oftentimes, they will invest in an recovery audits, which meticulously examines where all the money is going.
by: Ben Pate
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