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The effect of economy on your investments
In economics investments are actually the production per unit time of goods which are not consumed but are to be used for future production. In economics investments can be both tangible and intangible assets and can include factories that companies are building or they can include the training that the company provides its new employees or training it provides its continuing employees. The reason that these are considered investments is that they are not being used by the company currently, but they are being used in the future to help make or sell the products. Basically what is happening is that companies are investing in the time and materials they are going to need in the future, which include production facilities or trucks to ship the goods and the employees that are needed to produce the products.
Now that you understand how investments work in economics they are a few more things that you need to understand before we get to the six roles that investments plays in economics. One thing that you need to know is that the more money you invest in tangible and intangible assets the higher your return is going to be in the future. What this means is that the more hours you spend training your employees on what they are supposed to be doing and how they are supposed to be doing the better the employee will be able to do their job and do it correctly. But another thing that you need to know is that as interest rates raise the chances of companies borrowing money to add to their investments is going to be less because of the fact it is going to cost more to borrow the money and in the long run that means less of a return on the money. What is the smartest thing to do is to invest the companies own money if at all possible, this way you are not having to pay back the finance charges or the high interest rates to other people. |
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