Four Most Important Economic Principles of Finance
Demand is the purchasing power exercised by the public in relation to certain goods. Supply is the response to that demand where producers place their goods or services on the market at customers’ disposal. By buying certain products and refusing to buy others, consumers have the main role for the financial situation in companies and public organizations. Companies that enjoy popularity among consumers benefit from increased sales and financial income. Thus, they can participate in a state economy as major business players and develop future business by making use of their available finances.
Financial stability is an economic term referring to the situation in a domestic economy. It is related to whether a country can meet its needs and whether it can avoid financial crisis. When a country is financially stable, this means that it can compose a debt free budget for its economy and needs. Business and public establishments can develop when a country is financially stable employment ensures the income of consumers who would contribute financial capital to producers while exercising their purchasing power. The study of finance observes such flows of capital that are essential for the stability of the private sector in an economy and vital for the maintenance of undisturbed trade on a domestic level.
The economic growth is an economic element that relates to the development of a particular economy. When an economy is expanding, this gives opportunities to business establishments to grow. This ensures the flow of finance in businesses since production is necessary to satisfy the demand resulting from the growth of a domestic economic system. For example, much of the world markets are now influenced by China which, thanks to its rapid development, became one of the major players in the world trade. Thus, the financial income in the country significantly increased along with the availability of capital for Chinese businesses.
Trade lies in the core principles of finance. As Mark Gertler, a professor of economics at the University of Wisconsin, has pointed out in his articles, financial operations are determined by the state of global trade and the exchange of goods and services for financial consideration. Financial interactions between businesses are conducted through trade companies buy products necessary for their production from other organizations and attract investors who would contribute capital for the promotion of products that would be later traded and so on. Gregory.