How does the economy work.
How does the economy work? Economics is a complicated subject. To make things easier imagine a simple example. Samuel Greedy founds a bank in el Dorado, California. A. Stone, a building contractor finishes his first big job and receives a payment in cash of $1 million. He deposits this sum in Mr Greedy’s bank. The bank now has $ 1 million in capital. Jane McDoughnut wants to set a restaurant in El Dorado. She doesn’t have enough money so she goes to the bank and presents her business plan.She gets $1 million loan. McDoughnut now hires Stone to build her new restaurant. His price is $1 million. She pays him. -How much money does Stone in his bank account? (1)____________________ - How much money (cash) is located in the bank? (2) ______________________ But it doesn’t stop here. Two months later Stone informs McDoughnut that, due to problems and expenses, the bill for c...