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Contemporary financial managers should be familiar with two areas of economics – macroeconomics and ...
Macroeconomics is concerned with the over-all institutional environment in which the firm________. It looks, in other words, at the economy as a________. Macroeconomics is concerned with the institutional structure of the banking system, money and capital markets, financial intermediaries, monetary, credit and fiscal ________ and economic policies dealing with and controlling the level of activity within an economy. Since business firms operate in the macroeconomic environment, it is important for financial managers to understand the broad economic________. Specifically, they should recognise and understand how monetary policy ________the cost and the availability of funds; be versed in fiscal policy and how it affects the economy; be aware of the various financial institutions and their modes of operations to evaluate the potential investment/financing outlets; and understand the consequences of various levels of economic activity and changes in economic policy for their decision environment and so on.
Microeconomics deals with the economic decisions of_______ and organisations. It concerns itself with the determination of optimal operating strategies. In other words, the theories of microeconomics provide for effective________of business firms. They are concerned with defining actions that will permit the firms to achieve_______.
The concepts and theories of microeconomics relevant to financial management are, for instance, those involving supply and_______ relationship and profit maximization strategies, issues related to the mix of productive factors, "optimal" sales level and product pricing strategies, risk and the determination of value and the rationale for depreciating assets. In addition, the primary principle that applies in financial management is marginal analysis which ________ that financial decisions should be made on the basis of comparison of marginal revenue and marginal cost. Such decisions will________to an increase in profits of the firm. Thus, financial managers must be ________with the basic microeconomics.
Words you may need:
to be versed (in)разбираться (в чём-л.)
outletsn pl (зд.) возможности
rationalen основная причина, логическое обоснование
marginal analysisанализ по предельным показателям
marginal revenueпредельный доход
marginal costsпредельные издержки