University of Baghdad

College of Administration and Economics

English language
Post graduate students

Dr . Jafar B . AL-Dujaili

Economic vocabulary

micro economic
macro economic
demands
supply
market
prices
income
value
money
equilibrium
wages
production
profit
resources

labor
trade
choice
free goods
economic goods
Elasticity
Economic resources
The factor of production
Land
Labor
Capital
The Entrepreneur
Investment
Command Economy
Market Economy
Mixed Economy

Consumers
Producers
Spending
Saving
Productivity
Cost of production
Policy
Tax
Large Firms
Small Firms
Economic Growth
Revenue
National Income
Gross National Produce
Employment
Distribution

Local
International
Supply Of Labor
Demand For Labor
Mobility Of Labor
Population
Local Authority
Saving Institution
Banks
Bank System
Inflation
Monetary Policy
Financial policy
Project
Globalization
Economic Crises

Human resources
Unemployment
Standard Of Living
Monopoly
Salary
Central Bank
Commercial Bank
Recalcitrant
Credit
Stock Exchange
Pervasive
Competition
Joint venture
Debentures
Curtailing
Costs Of Production

Fixed & variable

Average & Marginal Cost
Specialization
Economic Problem
Opportunity cost
Economic Law
The Economic System
Economic Theory
Assumption
law
theory
Hypotheses
Economic Goals For
Society
Efficiency
Optimal Utilization

Technical efficiency
Efficient Use Of Resources
Economic Stability
Equality
Economic Activity
Individuals Demands Curve
Market Demand Curve
Determinants Of Demand
Number Of buyers
Consumer's Taste
Consumer's Incomes
Consumer's Expectation
Price Of Other Goods
Supply Curve
Market Supply Curve
Determinants Of Supply
Number Of Sellers
8

Technology
Input prices
Tax subsidies
Definition Of Market
Interaction Of Demand & Supply
Shortage
Surpluses
Price control
Price selling
Price Elasticity Of Demand
Percentage Change in price
Percentage Change In Price
Percentage Change In Quantity Demanded
Percentage
Determinants Of Demand Elasticity
Consumer 's budget

Luxury goods
Necessity goods
Long Term
Short Term
Inelastic supply
Unitary Elastic Supply
Perfect Elastic Supply
Tax Incident
Gross Elasticity
Consumer behavior
Desire
Taste
Utility theory
Rational Policy
Cardinal Utility
Original Utility

10

Marginal Utility
Law Of diminishing Marginal Utility
Consumer's surplus
Indifference curves
Short Run & long Run
Production function
Production curves
Total fixed cost
Total variable
Average fixed cost
Average variable cost
Average marginal cost
Perfect competition
Pure monopoly
Price taker
Market power

11

Monopoly power
Barriers
Natural monopoly
Legal Barriers
Monopolistic competition
Non price competition
Price competition
Promotion
Advertising
Homogenous
Agriculture
Farming
Aspect
Bank loan
Commercial
Delegate (s)

12

Vocabulary
Tendency =
Concise

Courteous =
Insertion =
Layout =
Intention =
Specified =
Circular letters =
Bids =
Tender =
Force major =
Arbitration =
Publicity =
Hereinafter =
Reliable =

13

Triplicate =
Undersigned =
Prompt =
Dispatched =
Supplementing =
In duplicate =
Annulled =
Disputes =
Irrevocable =
Execute =
Pre-defined =
Chamber =
Transactions =
Intended =
Primarily =
Practitioners =

14

Uncertainties =
Interpretation =
Provision =
Fright =
Procure =
Premises =
Initial quotation =
Explicit wording =
Custody =
Equivalent =
Customs formalities =
Maritime =
Chartered =
Subsequent delivery =
Reputation =
Partnership =

15

Alliances =
Regulatory reform =
Thriving =
Sustainable =
Intermediation =
Accreditation =
Hubs =
Learning goals =
Provides quality assurance & distinction =

Criteria =
Ethical behavior =
Assessment =
Intellectual =
Mentor =
Kidnap =
Hostages =
16

Conviction =
Prosecution =
Acquittal =
Trademark =
Rigorous =
Conflict =
Stoke market =
Appeal =
Ordeal =
Tangible =
Trial =
Public event =
Emphasis =
Critical =
Bankruptcy =
Dilemma =

17

Solicitor =
Identical =
Vigor =
Punctual =

18

Vocabulary
: Contraction
: Prosperity
: Acceleration
: Accountancy
: Accumulated Interest
: Acknowledgment
: Administrative expense
: Adventure
: Advertisement
: Agency
: Inspection & Censorship
: Agreement
: Allowance
: Consolidation
19

: Anticipation
: Applied Economics
: Arrangement
: Balance Sheet
Balance of Trade :
: Inspector
: Barging
: Barter
: Beginning Inventory
: Blacklist
: Blackmail
: Economic sanctions
: Board of Directors
: Overseeing
: Boycott
20

: Deliberations
: Unification
: Business Cycle
: Business Economic
: Capacity
: Certificate
: Certificate of Incorporation
: Capital Expenditure
: Chairman of the Board
: Donations
: Collection
: Compensation
: Compulsory
: Conformation
: Currency
21

: Depression
: Emigration
: Multinational Companies
: Private property
: Privilege
: Production Management
: Professional
: Purchasing Power
: Remuneration
: Sabotage
: Warranty
: Centralization
: Financial Incentive
: Quality Control

22

Definitions
Account () :The report of money received and
spent.
Account Book () : The book in which
accounts are kept.

23

Accumulate ( ): To go on increasing .
Act of God ( ) : Violent or sudden accident
due to natural forces such as ship-wreck ,
earthquake, etc.
Actualities () : Current events.
Addition () : The process of adding .
Administration (): The force which directs,
supervises, controls and co-ordinates all the
activities of a business enterprise .
Advertise (): To make generally known.
Agenda () : The program of business to be
performed at a meeting .
Allowance (): A stated amount money to meet
certain expenses.
Bankrupt (): One who cannot pay his debts.
Bartering (): The act of giving one thing in
exchange for another.
Bazar (): A market place, particularly one where
fancy goods are sold.
Bidding (): Making an offer of a price .

24

Black List () : A list of people who try to act

against the law.
Boycott (): To shut out from all commercial
transactions .
Breach (): A breaking of law.
Breach Of Faith Or Trust () : Breaking of
unwritten agreement.
Bribe (): Money or something precious given to
influence judgment or corrupt the conduct.
Budget (): A statement made by the ministry of
finance to parliament of the revenue and the
expenditures of the government.
Censor (): To read with the purpose of removing
anything against the government policy.
Commerce (): The buying and selling of
commodities or services particularly on a large
scale nationally and internationally.
Confirm (): To establish more firmly.
Control () : In management it means to guide
something in the direction it is intended to go.
Correspondence (): Communication by means
of letters.

25

Crisis (): Moment of danger in economics or

politics, etc.
Crude Oil () : Oil in its natural state.
Currency (): Money in circulation.
Economic Freedom () : The individual is
free to do as he likes with his own property.
Economics () : The subject which treats
production and distribution of goods and
services for the satisfaction of human wants.
Emergency (( : A sudden unexpected event .
Famine (): Severe lack of food.
General Strike () : Stoppage of everywhere in
the country.
Genuine (): Real
Guarantee () : Thing given as security.
Income (): The amount of money one receives
each year.
Labor Union () : An organization consisting of
employees .
Overseas () : A broad beyond the seas.

26

Remuneration (): Payment or reward for work

done.
Resignation (): The act of giving up.
Responsibility & Authority :
In management it means that each individual knows
exactly what work he has to do and what rights
and powers he may exercise in doing it.
Smuggle () : To import or export without
paying the legal customs duty.
Economic Stability () : The stability of a
country from the economic point of view.
Storage () : The holding of goods between the
time of their production and their use.
Subsidies (): Grant or regular allowance.
Supplementary (): Additional
Trade Barriers () : Regulations which
interfere with the free exchange of goods and
services among different countries.
Unanimously (): Done with the agreement of
all.
Unemployment ():

27

The condition of being unable to find employment,

when able and willing to work.
Usury ():
Any rate of interest which is considered to be
unfair and unjust.
Civil Services () : Public services such as
water supply, electricity, telephone, railway, etc.
Bribery: a form of corruption, is an act implying money or gift giving that
alters the behavior of the recipient. Bribery constitutes a crime and
is defined by Black's Law Dictionary as the offering,
giving, receiving, or soliciting of any item of value to influence the
actions of an official or other person in charge of a public or legal
duty.
Poverty : is the state of one who lacks a certain amount of material
possessions or money.[1]Absolute poverty or destitution refers to
being unable to afford basic human needs, which commonly
includes clean and fresh water, nutrition, health care, education,
clothing and shelter.
Democracy :
is a form of government in which all people have an equal right in the
decisions that affect their lives.
Trade : is the transfer of ownership of goods and services from one
person or entity to another.

28

Incoterms: Incoterms or International Commercial Terms are a series of

pre-defined commercial terms published by the international
chamber of commerce (ICC) widely used in international commercial
transactions. A series of three letter trade terms related to common
sales practices, Incoterms are intended primarily to clearly
communicate the tasks, costs and risks associated with the
transportation and delivery of goods.
The United Nations (UN): is an international organization whose stated
aims are facilitating cooperation in international law, international
security, economic development, social progress, human rights, and
achievement of world peace.
Non-governmental organization( NGO) : is a legally constituted
organization created by natural or legal persons that operates
independently from any government.
The Food and Agriculture Organization of the United Nations (FAO) : is a
specialized agency of the United Nations that leads international
efforts to defeat hunger.
The World Health Organization (WHO):is a specialized agency of
the United Nations (UN) that acts as a coordinating authority on
international public health.
The United Nations Educational, Scientific and Cultural
Organization (UNESCO): is a specialized agency of the United
Nations. Its stated purpose is to contribute to peace and security by
promoting international collaboration through education, science,
and culture .

29

CHAPTER

ONE

Economics what it is about ?

Many of the words used by economists are very
familiar to us . We know that they talk & write
about such topics as money , prices , wages ,
employment , taxes , exports , and imports ,
earning , and spending .

Every day some economic problem or other is

mentioned in the newspapers , on the radio and
on the television .

Economics is part of everyday lives , for : We live in

an economic system , every day we take a part in
economic activities , and we are familiar with the
words used by economists .

30

Economi
cs
Is the
study of

The
satisfactio
n of
.. wants

Wants are
unlimited

Which
involves
the
consumpt
ion of
goods and

Which are
produced
with
scarce
resource

This
involves
. choice

Resources
are
limited in
supply
31

Which means that all

economic goods have
in opportunity cost

Chapter two
Definitions
Demand :-the amount consumers are willing and
able to purchase at a given price per period of
time
Supply : The amount producers are willing to offer
for sale at any give price as with demand , price
is a major influence on quantity supplied . as
price rises so does profit
therefore , now suppliers are attracted into the
market and existing
firms are tempted to
increase production .

32

Types Of Economic System

A

MARKET
ECONOMY

MIXED
ECONOMY

COMMAN
D

Features are
:

: Features are
Private property
-

Contain
features of
both market
and
command
economies

Freedom of
- choice
Self interest
Operation of the price
mechanism
(competition Represent
)

Public
- ownership
Planned Production
(resources
allocated by
government
directives )

Planned different ways of dealing

distribution

with the
Basic economic problems
:Which are

33

1- What to produce ?
2- How to produce it ?
3- For whom should

it

be

Demands
Definition: "the amount consumers are willing and
able to purchase at a given price per period of
time."
The individual demands of people are added
together to form the market demand.

Change in the conditions of demand

It is clear that demand depends upon many factors

not merely price. These are known as the
underlying conditions of demand. They can be
remembered by the word 'CIST'.

34

Complements. Many goods are in joint demand, e.g.

cars and petrol . it is clear that changes in the
price of cars will affect not only the demand for
cars but also the demand for petrol , as the two
go together . Generally, if the price of
complementary good increases then the demand
for the jointly demanded good is likely to fall.
Thus if the price of petrol rises, demand for cars
is likely to fall .

Income. It is clear that changes in the level of

income are likely to have a considerable impact
on demand. Furthermore changes in the
distribution of income will also affect market, For
example, if income tax becomes more
progressive the demand for luxuries may fall and
the demand for normal goods may increase.

Substitutes. Many products have a number of close

substitutes or goods which may be consumed
instead. For example, many people would be
largely indifferent as to whether they eat
cabbage or cauliflower for dinner. Hence if the
price of cauliflower suddenly rose, consumers
are very likely to buy cabbage instead. Thus
when the price of a substitute good rises,
demand for the original good increases too.

35

Tastes and fashions. This will be obviously be a

major factor affecting demand for certain
products.

Supply
Definition :

The amount producers are willing

to offer for sale at any given price.

As with demand, price is a major influence on

quantity supplied . As price rises so does profit,
therefore, new supplies are attracted into the
market and existing firms are tempted to
increase production .

Conditions of supply :
Basically anything that influences profit will affect
the conditions of supply . There are a number of
conditions of supply which may change and
produce a new supply curve . These can be
remembered by the word " COPING " .

36

Costs :
This item refers to the cost to the firm of paying the
factors of production . If a firm has to pay more
for its raw materials, etc . , it will require a
higher selling price in order to maintain its
normal profit at existing output levels . An
increase in costs will lead to a decrease in profit
and therefore a reduction in supply.

Other prices :
The impact of other prices depends on the
relationship between the good being supplied
and other goods .

Innovations :
We live in an age where rapid technological change
is the norm. Thus firms are often able to use
technological change to produce goods much
more cheaply, e.g. the use of robots and
computers.

Government policy :

37

Here we are particularly concerned with the effects

of Indirect taxation and Subsidies upon the
supply curve. For instance, an increase in VAT
means that suppliers will wish to sell the same
quantity at higher prices and so the supply curve
will shift to the lift. When a tax is imposed the
producer receives the selling price less the tax
this reduces profit and therefore decreases
supply . Vice versa for a subsidy .

38

Elasticity

Definition :

The responsiveness of
supply/demand to a given change in price .

Measurement of price elasticity of

demand
Elasticity is measured by the Coefficient of

elasticity

Factors influencing (price) elasticity

of demand These can be remembered by the
word " THIS"

39

Time : In the short term consumers may not fully

appreciate possible alternatives and thus
continue to purchase certain goods following a
price rise . However, in the longer period they
will become more aware of other possibilities.

Habit

: Quit often we purchase goods

automatically without, perhaps, being fully
aware of the price which we are paying , e.g.
newspapers, milk. Thus goods which are
habitually bought are more likely to be in
inelastic demand. Furthermore some products
have an addictive effect, e.g. cigarettes. The
nicotine addict will continue to burn a way
his/her money almost regardless of price .

Income :

Some goods constitute only a small

proportion of consumers income, e.g. matches.
In this case even a 100 per cent rise in the price
of matches can be quite easily absorbed since
most consumers spend only a tiny fraction of
their income upon matches. Demand is thus
likely to be inelastic . Compare this with how
you think consumers would react to a doubling of
car prices .

Substitutes :

Possibly the single most

important factor is the closeness and availability
of substitutes. For example, petrol has no
genuinely effective freely available substitutes.

Measurement of elasticity of supply

The co-efficient of elasticity of supply is defined as
40

Factors affecting elasticity of supply

Time

: In most manufacturing industry

production plans can be altered relatively
quickly, bearing in mind that contracts for
purchases of raw materials, etc., are often
binding for around six months. However, in
agriculture the eventual size of the harvest, once
the seeds are planted, depends upon climatic
conditions. Current market prices will have no
effect upon crop yields at all .

Factors of production

: Manufactures can
only respond to increased prices if the extra
factors of production are freely available. If,
however, the factors of production are
unavailable or available only at an increased
cost, then firms may be less inclined to respond
to rising prices by increasing output. Thus supply
will tend to be more inelastic.

41

Factors of production
All productive processes require factors of
production in varying proportions. The factors
are Land, Labor, capital and enterprise.

Land
A natural resource covering all ' free gifts of nature
', e.g. earth, trees, flat land, sea, rivers, etc.
Land can be bought or rented, but it is necessary
before production can be started. The owners of
land receive rent for its use.

Labor

42

A human resource workers of every type in every

kind of activity from surgeons to shop assistants.
Different jobs require different qualities of
strength, skill, education, and responsibility. The
bigger the organization then usually the wider is
the variety of human work required. Labor is
'owned' by individuals who sell it to firms, and
receive wages/salaries in return.

Capital
Capital is a man-made resource, e.g. machinery, a
lorry or a robot. It is used to make consumers
goods and services. Without capital, there would
be no production. Usually capital and labor are
combined. Capital lasts a long time but
eventually needs replacing. When its value
declines with age, it is said to be 'depreciating '.

Enterprise
Another human resource. This factor refers to the
organizing, planning and risk-taking by the
owner of a business. Hi receives profit for his
work, and is called the entrepreneur. However, in
modern economies large businesses are seldom
owned by one person; instead they are owned by
many shareholders and controlled by a Board of
Directors.

43

Economic goods are scarce goods

There seems to be no limit to people's wants and no
limit to view ideas for satisfying them. At any
moment in time, however, there is a limit to the
amount of goods and services which can be
produced. The economic recourses land, labor,
materials, fuel, factories, machinery, etc. which
are needed to produce goods and services are
limited in supply.
It is true that, as time goes by technical progress
enables us to produce more of the things people
want. The problem is that our wants seem to
grow as fast as, or even faster than, our ability
to produce goods and services.
The basic problem of economics, therefore, is that
economic resources are limited in supply but
people's wants seem to be unlimited.
44

We cannot buy all the things we would like to have.

When we make a choice, we select from the
things we can afford those which give us the
most satisfaction or pleasure.
When we make a choice, something has to be given
up or forgone. The thing we decide to give up is
the sacrifice we have to make in order to obtain
the thing we have chosen.
What we give up is described as the opportunity
cost of obtaining the thing we have chosen.

The Main points

Human wants appear to be unlimited. Rising
standards of living seem to encourage demands
for even higher standards.
The economic resources available at any time
cannot supply enough goods and services to fully
satisfy human wants.
Scarcity and choice are features of all societies, rich
and poor alike.
Opportunity cost refers to the fact that when ever
a choice is made, something has to be given up.
The thing we have to give up is the true cost of
the thing we have chosen.
Free goods are those which can be obtained without
sacrificing something else. The production of
these goods does not use up scarce resources.
45

Production includes the outputs of services as well

as physical goods.
In a modern economy, we are, as individuals,
incapable of producing for ourselves all the
things we need for survival. We are all
dependent upon a system of exchange.

The question every society must answer

All societies, from the most remote Indian village to
the large industrialized country, must find ways
of answering the following questions.

What goods and services should be

produces, and in what quantities?
A country can only produce some of the goods and
services its people want. It must, therefore, find
some method of choosing which particular goods
and services to produce. If the aim is to produce
those things which best satisfy the people's
wants, then it has to find a way of discovering
what people really want.

How should the goods and services be

produced?

46

Many commodities can be produced by using

different method of production. Some
manufactured goods can be produced either by
small firms using a lot of skilled labor or by
mass-production methods, in which a lot of
capital equipment is used.

For whom should the goods and

services be produces?
Question 1 and 2 are problems of production. But
even if the problems of production are solved,
there is still the problem of distribution how
should the things which have been produced be
shared out among the members of the
community?
We can pose some questions to illustrate the
difficulties in finding satisfactory solution to this
problem:
Should there be equal shares for all?
Should those who produce more have larger shares
than those who produce less?
Should skilled workers receive more than unskilled
workers?
Should each person's share be based on his or her
needs? (And how should decide what a person
needs?)

47

48

Wealth and income

Wealth :
Wealth consists of a stock of goods which have a
money value. It includes such assets as land,
houses, factories, shops, machines, and many
kinds of personal possessions.

Private wealth :
This describes the possessions of individuals. It will
obviously include land, houses, works of art,
jewellery , motor cars and so on. Private wealth
also includes financial assets such as notes and
coin, bank deposits, building society deposits
and company shares .

Social wealth :
This consists of those assets owned by the
community as a whole (i.e. by central and local
government). It includes such things as roads,
hospitals, schools, parks and libraries.

National wealth :

49

This is the sum of all the wealth possessed by the

citizens of a country, whether it is privately
owned or publicly owned.

Income :
Whereas wealth is a stock of assets which have a
money value, income is a flow of money.
Income refers to the amount of money earned or
received during a given period of time usually
one year. An individual may receive income in
various forms, such as wages, salaries, interest
on savings, rent from the ownership of property,
profits on shares, or social security payments.
The basic difference between income and wealth is
that :
Income is a flow of money received during a given
period of time, while
Wealth is a stock of assets owned at some moment
in time.

50

Production, consumption and exchange

Every day we can see people carrying out economic
activities. They are taking place in houses,
shops, offices, factories and banks, on farms, on
building sites, and so on. The study of this great
variety of activities is made much easier by
classifying them into three main types of activity
production, consumption and exchange.
Production
The word production is usually taken to mean the
making of some physical object, such as a motor
car, a piece of furniture or a pair of shoes, or the
growing of some particular crop , such as wheat
or potatoes.
In economics, however, the word "production" has a
much wider meaning. Production takes place so
that people's wants can be satisfied. Any kind
of work which helps to satisfy people's wants,
and for which they are prepared to pay a price, is
productive work.

51

Production , therefore includes the output of

services as well as goods. If people are prepared
to pay a price for a service, it must be satisfying
a want in the same way as a physical object. The
people who work in service industries (such as
wholesaling, retailing, banking, insurance,
accountancy, transport, the law, education and
health) are productive in the same way as car
workers and farmers. It is clear that, in a modern
economy, factories, mines, power stations,
farms, etc. Would find it impossible to operate
without such services.
Consumption
Consumption describes the "using up" of goods and
services in order to satisfy our wants.
Durable consumer goods
These are consumer goods which have a fairly long
life many of them last for several years. They
include such items as household furniture,
domestic appliances and the family car. We
consume the services such things give us rather
than the goods themselves.
Non-durable consumer goods
These are commodities which are used up
immediately (i.e. in a single use) or in a
relatively short period of time. Food, drinks, soap
and toothpaste are obvious examples of nondurable consumer goods.

52

Services
In a modern economy, a large part of total
consumption consists of services. In Iraq, for
example, we are all very dependent on the
transport, telephone, legal, education and health
services. Entertainment is another important
service industry.
Exchange
In all but the most primitive societies, some kind of
exchange must take place before people can
satisfy their wants. Very few, if any, of us can
produce for ourselves all the things we need to
maintain our present standard of living.
The great majority of workers specialize. Some
spend their day producing some small part of a
product (e.g. workers on an assembly line).
Others specialize in supplying some particular
service (accountants, teachers and shop
assistants). Specialist workers can survive and
enjoy a high standard of living because there is a
system which enables them to exchange what
they produce for the goods and services
produced by other specialists.
This system of exchange depends upon the use of
money. What happens is that we sell our services
for money (wages and salaries), and then use
this money to buy the things which others have
produced.

53

54

MARKETS
Introduction
A market is where goods and services are bought
and sold. This need not be an actual place,
although most markets can be located. The main
requirement for a market is that buyers and
sellers can communicate this may be done by
telex, email, letter or word of mouth.
The term "market" is used in many ways in
Economic :

1- Retail market. People normally mean stalls from

which goods are sold to the final consumer. Most
towns have traditional market days in which
itinerant traders sell their products.

2-Wholesale markets. In the chain of distribution

manufacturers sell to retailers through
wholesalers. Their function is to buy the
manufactured goods and raw materials and
distribute them to shopkeepers . Most wholesale
markets are in regional centers .

3-Product markets. In Economics, a market refers to

the trade in a particular product when it is made.
55

4-Factor markets. The factors of production (land,

labor, capital, enterprise) are sold to buyers who
wish to make goods and provide services. Their
demand is said to be derived from the demand
for the final product, e.g. oil companies seek
more divers if demand for oil increases.

5-Geographical markets. This refers to the size of

the market in terms of potential customers. For
instance, the market for "self-pick" strawberries
is limited by the distance people are prepared to
travel and the price difference between selfpicking and buying from a shop. As the sale of
many raw materials, e.g. silver and primary
products such as cocoa, is world-wide, these
would be classified as international. In between
local and international markets, there will be
regional and national markets.

6- Commodity markets. The trade in basic raw

materials and foods is centered in London, e.g.
cotton, tea exchanges. The goods can be bought
immediately at the prevailing price (spot)
determined by demand and supply or a future
date at an agreed price. The latter system was
developed to protect traders from price changes
over time.

56

57

Market structures
Main market structures are Perfect Competition,
Monopoly and Imperfect Competition.
Perfect competition
This structure describes an imaginary situation in
which no one buyer and no one seller can
determine the market price and each has perfect
knowledge of market conditions. It is
characterized by :
1- A large number of sellers. Each seller provides
just a small share of the total and this makes him
unable to influence market price.
2- Perfect information. Each buyer has complete
knowledge of the market. Such information
means that no seller can raise his price as he will
lose all his customers, assuming that they are
rational.
3- Freedom of entry into the market. If firms in a
market are making large profits (abnormal),
more entrepreneurs will be attracted into the
industry. It is assumed in perfect competition
that entry is easy and that there are no
restrictions on entry.
4- Homogeneous products. All goods are identical
and cannot be distinguished.

58

5- Many buyers. Each consumer buys only a small

proportion of the total goods available and thus
cannot influence market price by their own
actions apart. Any differences between products
would make competition less than perfect.
6- No government interference
7- Perfect mobility of goods/factors throughout the
market . This assume no transport and no
training costs.

59

60

Money
Introduction :
Today, money can be obtained legally by :
1-Working for it, e.g. a week's wages.
2-Gaining an income for letting someone use your
assets, e.g. rent for a flat.
3-Being paid by the state, e.g. Supplementary
Benefit.
4-Receiving a gift, e.g. 5 $ for birthday.
5-Borrowing e.g. a bank loan.

Definition :
"Money is anything that is acceptable to its users
in an economic system."
As most economic systems operate through trade,
because people are not self-sufficient, the money
has to facilitate the exchange of goods/services.
These goods and services need to be valued and
money is the measure which does that. Any
profits made might wish to be saved for future
use, thus money needs to keep its value.

61

It is often said that "money is what money does".

This means that anything can be used as money
as long as it performs certain key functions.

Functions :
There are four main functions of money. They can
be remembered by the word "SUMS".

Store of value. When people receive money the

amount not spent is saved. People expect their
savings to maintain their value for when they
wish to spend them. Thus money should be
capable of holding its value through time, so that
the buying of goods in the future by savers

does not put them at a disadvantage.

In the past, people hoarded gold because it kept its
value. Clearly if inflation is rapid, the value of
savings falls and money does not function
efficiently as a store of value.

Unit of account. This is sometimes referred to as

a "measure of value". It means that all goods and
services are valued in common units (e.g. pound
and pence) which people accept and understand.

62

Medium of exchange. This function means that

the money is acceptable to the seller when the
buyer pays for the good bought.
In a modern society a worker is paid wages in
money (rather than goods) and this enables him
to spend when and where he wants.

Standard of deferred payments. Deferred

means "postponed". Money allows for goods to
be obtained one day and paid for on another day,
or over a period of time, in an acceptable way.
Thus it enables credit to be given to buyers and
reassures sellers that they will receive the
expected amount, valued in money, later. Credit
thereby encourages trade.

Qualities :
In order to perform the above functions, anything
used as money needs to possess certain
desirable properties. These characteristics can
be remembered by the phrase "ADDS UP".

63

Acceptability. This key quality means that people

are prepared to accept something as money.
Thus the Yap Islanders in the South Seas used to
make payments in giant stone cartwheels which
were kept under water. They facilitated the Store
of Value function better than the other functions!

Durability. Money needs to be long-lasting,

particularly in order to remain as a store of value
and standard for deferred payment. Thus
perishables are no good as money. It is probably
because of this that people keep new crisp notes
and spend old tatty ones.

Divisibility. The money used has to be capable of

being divided into units, so that small amounts
can be paid exactly. Thus, we have 1 $ which
divides into 50p, 20p, 10p, 5p, 2p and 1p pieces.
The development of checks is making this
quality less important, but it will remain whilst
most of the adult population do not have bank
current accounts.

64

Stability. The maintenance of value over time is

important for money to keep its store of value
function, so that trust is maintained. If a
currency loses its stable value then the economic
system goes haywire. For instance, the
hyperinflation of Germany in the 1920s led to
wages being paid twice per day and money being
quickly spent because its value was rapidly
declining. Value is maintained if money is
relatively scarce, e.g. sand or leaves would not
be chosen.

Uniformity. If money is of variable quality then

people may be wary of certain types of money.
For instance in 1983, people were reluctant to
hold 1$ coins and preferred 1$ notes. In the past
coins with more precious metal in them were
retained and others spent. Thus, today, all 10p
pieces are identical in shape, size, weight and
content and this facilitates all functions of
money except the Store of Value idea. Uniformity
aids easy recognition of money.

Portability. Money needs to be easily carried

around so that it can be exchanged for
goods/services as required.
Today checks give a consumer flexibility and
increased choice,

65

because they are easy to transport and generally

acceptable.

Monetary Inflation In Iraq

Introduction:

It is commonly known that the monetary inflation

problem or phenomenon represents a serious
economic illness which has been affecting most
economies of the countries around the world
including rich and advanced countries whose
losses varied remarkably.
66

Inflation phenomenon has become of interest to

economists throughout the world. There is a
controversy on a wide scale over the reasons for
such phenomenon and its economic impacts on
the economic regime.

Monetary inflation reflects the ongoing increase in

prices as a whole, and as such inflation
represents continued decline in the purchase
power because of the large volume of money in
circulation. Monetary inflation reflects lack of
economic equilibrium in the markets of goods
and services along with the production factors
comprising capital, land, machines and
manpower.

Besides, monetary inflation takes place as a result

of the imbalance between cash flows and influx
of goods and services into the market. In fact,
increase in cash flows is in this case higher than
the increase in influx of goods and services.

67

If we look into the monetary inflation in Iraq, we

will find that inflation has a longstanding history
with the Iraqi economy. the real value of the Iraqi
currency has dropped remarkably and such drop
has always been accompanied by a big rise in
the prices of goods and services. Iraq has the
highest inflation rate among (22) Arab countries,
and monetary inflation rate reached 64.8%
according to the statistical bulletin of 2006
issued by the Economic and Social Affairs
Department of the United Nations. This rise
resulted from the rise in the index figure of
commodities consumed by the citizens such as
food stuffs, garments and apparel, fuel,
transportation, rentals etc. The consumer's
general price index figure rose during the years
2003, 2004, 2005, and 2006 according to the
following rates 33.6%, 33.9%, 36.9%, and 64.8%
respectively.

Brief History of the causes of inflation

in Iraq:

Repercussions of the monetary inflation problem

have been ongoing since the 1980s up to this
time. The problem will be addressed in this
research in two phases Monetary inflation in Iraq
before & after 2003

68

* Economic inflation in Iraq before 2003:

Although the economic activity was dominated by

the State during that period, the State could not
restrain inflation and contain its impacts. Iraq
was then suffering from recalcitrant inflation
which reached an annual average of nearly 237%
during the years 1990-1995 according to the
statistical figures of the Iraqi Ministry of
Planning. This inflation was caused by the
following factors:

1. Iraqi economy was transformed into an economy

totally dependent on revenues as a result of
selling oil for financing public expenditure. Iraq
took the lead in terms of the countries which
depended on foreign trade to the Gross Domestic
Product (GDP) by approximately 68.5% as an
average for the period 1970- 1994.

69

2. Iraq was involved in several military and political

crises beginning with the Iraq - Iran War and
ending with the Second Gulf War. In the period
from 1980-1988, Iraq lost its foreign currency
deposits amounting to US$(40) billion along with
the interest rates which would have hopefully
been accrued and obtained on such reserves.
Moreover ,Iraq`s debts reached around US$(80)
billion, and the total costs of the Gulf War are
estimated at US$( 450) billion. On the other
hand, all the components of Iraqi economy
suffered economic destruction, and the public
balance of the country sustained un parallel
deficit, accompanied by an increasing foreign
debt along with compensations amounting to
more than US$(200) billion.

In the early 1990s, the former regime issued local

currencies without gold cover and at local print
houses reconstruction of the country thereby
worsening the situation. This action led to large
increase in money supply, and intensified
inflationary pressure at horrifying rates. Money
supply rose from (24670) million I.D in 1991 to
about (298189) million I.D in 2003.

3. Pervasive destruction of the infrastructures

especially in terms of energy resources
(electricity and oil) roads, bridges, health and
educational institutions'. These facilities still
need enormous amounts of money to be restored
to service.
70

4. Economic blockade imposed on Iraq led to an

overall paralysis of the economy of the Iraqi
economy comprising all its sectors especially
after the oil exports were halted.

Economic inflation in Iraq after the year

2003:
The events in Iraq since downfall of the former
regime and the Allied Forces domination of Iraq
have altogether accelerated the apace of
deterioration, particularly as the productive
firms were subjected to looting, burning and
destruction throughout the country. Economic
recession pervaded the components of the Iraqi
economy to the extent that the temporary
coalition authority has worsened an already
ailing Iraq. The impacts of this situation on
monetary inflation which affected the Iraqi
economy can be summed up in the following
points:

1. Removal of State from the economic fields,

exclusion of State from the market mechanisms,
and lifting State subsidy for a wide spectrum of
basis goods, especially after the instructions
which the International Monetary Fund (IMF)
issued to the Iraqi Government to remove
subsidy for the oil products.
71

Such subsidy used to constitute a significant

portion of the family's income, and this led to
rise in the prices of goods and other services
owing to the high costs of transportation.

2. The country has been forced to adopt a free

foreign trade policy and to consolidate import
trade which helped the goods from the
industrialized countries to invade the local
market, particularly as those goods are originally
highly competitive and this led to destroying the
local industries.

3. Growing number of the unemployed especially

after the destruction of productive sectors in
Iraq. It is necessary to point out here that before
2003 there were nearly (192) major projects for
the Iraqi Government hiring approximately half a
million employees who became unemployed after
2003. Moreover, large numbers of army, police
and security forces became unemployed after
the decision the temporary coalition authority
issued to dissolve the army, police and security
forces. Therefore, poverty ratios rose
considerably in the country where, according to (
IMF) estimate, 22% of the Iraqi people are living
under the poverty line.

72

4. Security situation has gone out of control and

resulted in obstructing the efforts exerted for
repair and reconstruction of the economic
infrastructures in Iraq. Anarchy and lack of
security in Iraq made the State budget heavily
burdened with expenditure required for
providing the armed military forces with training
and weapons. The money spent in this regard is
estimated at more than US$ (60) billion,
according to the statistical figures issued by the
Iraqi Ministry of Planning.

5. The reasons that led to continued and rowing

inflation include the inflationary gap on the basis
of money supply which exceeds demand.
According to the information on the Iraqi
economy, such gap consists of the large
monetary mass in the market as reflected by the
money supply which is the result of adding the
net currency in circulation to the current
deposits as opposed to the declining quantity of
goods and service products. Our local markets
suffered from the presence of ID(5.7) trillion in
2003 which rose up to ID (10.1) trillion in 2004.
In 2005, this figure rose up to ID (11.3) trillion
and to ID (13.2) trillion in 2006 thereby
increasing the price level and affecting the
financial asset values on the part of both
establishments and individuals.

73

6. Financial and administrative corruption became

widespread in Iraq, where also millions of dollars
in cash disappeared from the Iraq Development
Fund managed by the United States, and control
authorities inability to chase the corrupt. For
these reasons, public became susceptible to
looting and theft different groups.
Apparently this led to failure of the new
development projects.

7. Structural disorder as a result of the slow and

declining growth of public revenues along with
the rigid tax structure. As a result of such
disruption, tax revenues could not cover the
government expenditures, and this led to deficit
in the State public budget.

The Economic Reform Required In Arab Countries

In the last decade, a number of Arab countries have

embarked on a process of economic reform in
response to the economic challenges originating
from both pressures to integrate into the global
economic system and from domestic economic
needs.
74

At the global level, increased competitiveness and

new trading patterns as well as international
commitments and multi-lateral trade and
cooperation agreements have required the
reform of the existing economic system
characterized by a high level of state
involvement into an effective and competitive
market economy.

Reform have also implied the creation of new and

amendment of existing legal and institutional
frameworks in support of a competitive economy
with reduced state intervention. These
amendments involve among others the
promulgation of laws regulating privatization,
competition, investment, trade of goods and
services, financial and capital markets as well as
the labor market.

Economic reform consists of a choice from among a

range of economic policy options. Ideally, the
choice among economic policy options should
reconcile between the internal economic
development that supports social development
and that which is required by increased
integration into the global economic system.

75

The response of Arab countries to the pressure to

integrate in the global economy has been
diverse. In some countries, economic reform has
been uneven and selective and has involved
some economic sectors at the expense of
. others

In other countries governments have made

progress to transform their economies into a
market-oriented one. However, even in those
successful cases, economic reform programs
have often sidelined social development and
have even contributed to increasing social
.inequalities

76

At the domestic level, the most pressing challenge

faced by a number of Arab countries remains the
rapid population growth and the concurrent
increase in unemployment rates as well as the
resulting rise in social demands. In addition, in a
number of Arab countries, as a result of
economic reform programs, the poverty rate has
increased and constitutes an urgent priority to
be addressed, in order not to threaten social
stability. Thus, economic reforms that are
supportive of social development have become
one of the most pressing needs for Arab
governments and constitute a key precondition
.for sustainable human development

77

78

Human Rights
Human rights are the rights possessed by all
persons, by virtue of their common
humanity, to live a life of freedom and
dignity. Human rights are universal they
are the same for everyone, everywhere.
They are protected by law.
International human rights law has evolved with the
goal of safeguarding the safety and the dignity
of the human person by establishing legal
obligations on countries to protect the rights of
all people under their legal authority.
It is based on the 1948 Universal Declaration on
Human Rights, which contains thirty articles
pointing all the human rights that ought to be
protected by governments and the international
system.

Some of the articles below :

Right to life: every person has the right to life and

has the right not to be arbitrarily deprived of
life. A person must not be subjected to torture ;
or treated or punished in a cruel, inhuman or
degrading way; or subjected to medical or
scientific experimentation or treatment without
his or her full, free and informed consent.
79

Freedom from forced work : a. A person must not

be held in slavery, b. A person must not be made
to perform forced or compulsory labor.

Freedom of movement : every person lawfully has

the right to move freely and to enter and leave
his country and has the freedom to choose where
to live.

Privacy & Reputation: A person has the right not to

have his or her privacy, family, home or
correspondence unlawfully or arbitrarily
interfered with, and not to have his or her
reputation unlawfully attacked.

Freedom of thought, conscience, religion and

belief : every person has the right to freedom of
thought, conscience, religion and belief,
including the freedom to have or to adopt a
religion or relief of his or her choice. The
freedom to demonstrate his or her religion or
belief in worship, practice and teaching, either
individually or as part of a community, in public
or in private. A person must not be restrained in
a way that limits his or her freedom to have or
adopt a religion or belief in worship, practice or
teaching.
80

Freedom of expression : every person has the right

to hold an opinion without interference, every
person has the right to freedom of expression
which includes the freedom to seek, receive and
impart information and ideas of all kinds,
whether orally or in writing or in print; or by way
of art; or in another medium chosen by him or
her.

Peaceful assembly and freedom of association :

every person has the right of peaceful assembly,
every person has the right to freedom of
association with others, including the right to
form and join trade unions.

Protection of families and children: families are the

fundamental group unit of society and are
entitled to be protected by society and the law.,
every child has the right, without discrimination,
to such protection as is in his or her best
interests and is needed by him or her by reason
of being a child.

81

Taking part in public life : every person has the

right, and is to have the opportunity, without
discrimination, to participate in the conduct of
public affairs, directly or through freely chosen
representatives, every eligible person has the
right, and is to have the opportunity, without
discrimination to vote and be elected in elections
that guarantee the free expression of the will of
the electors; and to have access, on general
terms of equality, to the public service and public
office.

Cultural rights : all persons with a particular

cultural, religious, racial or linguistic background
must not be denied the right, in community with
other persons of that background, to enjoy his or
her culture, to declare and practice his or
religion and to use his or her language. Original
persons hold distinct cultural rights and must
not be denied the right, with other members of
their community to enjoy their identity and
culture; and to maintain and use their language,
kinship ties.
Right to liberty and security of person :

Every person has the right to liberty and security.

A person must not be subjected to arbitrary arrest
or detention.

82

A person must not be deprived of his or her liberty

except on grounds, and in accordance with
procedures, established by law.
A person who is arrested must be informed at the
time of arrest or detention of the reason for the
arrest or detention of the reason for the arrest or
detention and must be informed about any
proceeding to be brought against him or her.
A person who is arrested or detained on a criminal
charge- must be brought before a court; and has
the right to be brought to trial without
unreasonable delay; and must be released if
paragraph (a) or (b) is not complied with.
A person awaiting trial must not be automatically
detained.

Correspondents
Nowadays the business organization requires fast
and effective means of information transfer and
communication. The Email, telephone, telex are
generally used, and there is a tendency for a
direct contacts rather than letter writing. The
offices try to have standardized forms to cut
down the time spent on the elaborate writing of
letters. But this does not mean that
correspondents have been removed from the
office.
The ability to write a clear, concise and courteous
business letter is still necessary.

83

The commercial letter is designed for easy reading,

thus it has to be divided into short paragraphs,
each dealing with a new topic. The subject
matter must be explained clearly without
unnecessary words.
As the letter tends to be short conciseness is the
main characteristic features. Attention must also
be paid to the insertion of a number of polite
words and phrases that are in general use.
The layout of the business letter is important, too.
There are certain rules as to correct placing of
the date and address. A limited number of forms
is used for greeting and the closing of letter. It is
customary to indicate the subject of the letter.
Rules about punctuation must be strictly
observed .
As letter is sometimes the only means of
communication between the buyer and the seller
it must be written with great care.
Details for the letter design
The number of the house and the name of the
street, e.g. :
64 Almotanabi Street
The town and the country.
The town, e.g : Baghdad_ Iraq

84

For the letters going abroad_ the country, e.g. :

Iraq, India, China
If u have not got a permanent address and your
letters are send to someone else address C/O is
used.
These are the accepted forms of writing dates :
23rd August 2010
August 23rd 2010
23. 8. 2010
The abbreviations for days : 1st, 2nd ,3rd,4th , etc.
For months the following are sometimes used : Jan.,
Feb., Mar., Apr., (May, June, July), Aug., Sept.,
Oct., Nov., Dec.
The Reference for which Ref. is the abbreviation
saves trouble.
You should always refer to it in your replay.
6,7,8. Our correspondents Name and Address.
It is particularly advisable to put this on business
letters, e.g. :

85

Morris Motors Ltd.,

Oxford,
ENGLAND.

Buthley & Son Co. Ltd.,

P.O. Box No. 798,
Dry Dock Building,
LIVERPOOL.

Editor-in Chief,
PUNCH,
10 Bouverie Street,
LONDON E.C. 4.

9. The usual greeting to one person in a business

letter is Dear Sir or Dear Madam, to a firm Dear
Sirs or sometimes Gentlemen.

86

If we have had frequent business dealings we may

begin :
Dear Mr. Naught, or Dear Miss Twenty man,.
It might be useful to give the subject matter on a
special subject line, e.g.
10.Remember that Paragraphing is essential in the
body of the letter.
The paragraph look best if they been after the
common following the salutation. In the opening
paragraph if it is a replay these are some of the
more frequent initial phrases :
Thank you for your letter of ..
In replay to your enquiry of
With reference to your letter of..
We are in receipt of..

The body of the letter deals in detail with the

subject matter and gives all the necessary
information. It should be clear concise courteous.
There are a few formal endings for the closing
paragraph of a letter :
We trust that you will make an effort to..

87

We are looking forward to hearing from you..

We are waiting an early replay, and remain

11. for a business letter the following closing forms

are used :
Yours faithfully, Yours (very truly)
For more personal letters : Yours Sincerely
12. signatures should be written through the letter
itself and the name under signature are typed.

88

Globalization
Globalization refers to the increasing unification of the
world's economic order through reduction of such barriers
to international trade as tariffs, export fees, and import
quotas. The goal is to increase material wealth, goods, and
services through an international division of labor by
efficiencies catalyzed by international relations,
specialization and competition.
Globalization is an attempt to abolish barriers,
especially in trade. In fact, globalization has
been around longer than you might think.
Definition
Globalization is an elimination of barriers to trade,
communication, and cultural exchange.
Measurement
Economic globalization can be measured in different ways.
These center around the four main economic flows that
characterize globalization:
Goods and services,
e.g., exports plus imports as
a
proportion of national income or per capita of population
Labor/people, e.g., net migration rates; inward or outward
migration flows, weighted by population

89

Capital, e.g., inward or outward direct investment as a

proportion of national income or per head of population
Technology, e.g., international research & development flows;
proportion of populations (and rates of change thereof)
using particular inventions (especially 'factor-neutral'
technological advances such as the telephone, motorcar,
broadband)
Effects
Globalization has various aspects which affect the world in
several different ways
Industrial
Emergence of worldwide production markets and broader
access to a range of foreign products for consumers and
companies, particularly movement of material and goods
between and within national boundaries.
Economic
Realization of a global common market, based on the freedom
of exchange of goods and capital.
Financial
Emergence of worldwide financial markets and better access
to external financing for borrowers.

Political
90

The development of globalization has wide-ranging impacts

on political developments, which particularly go along with
the decrease of the importance of the State.

Technical
Central aspect of globalization has been the development of a
Global Information System, and greater transborder data
flow,
using
such
technologies
as
the Internet, communication satellites.

91

Negotiation
Negotiation is a dialogue between two or more people or
parties, intended to reach an understanding, resolve point
of difference, or gain advantage in outcome of dialogue, to
produce an agreement upon courses of action, to bargain
for individual or collective advantage, to craft outcomes to
satisfy various interests of two people/parties involved in
negotiation process. Negotiation is a process where each
party involved in negotiating tries to gain an advantage for
themselves by the end of the process. Negotiation is
intended to aim at compromise.
Negotiation occurs in business, non-profit organizations,
government branches, legal proceedings, among nations
and in personal situations such as marriage, divorce,
parenting, and everyday life. The study of the subject is
called negotiation theory.
Other negotiation styles
There are five styles of negotiation[11 ]Individuals can often
have strong dispositions towards numerous styles; the
style used during a negotiation depends on the context
and the interests of the other party, among other factors. In
addition, styles can change over time.
Accommodating: Individuals who enjoy solving the other
partys problems and preserving personal relationships.
Accommodators are sensitive to the emotional states,
body language, and verbal signals of the other parties.
They can, however, feel taken advantage of in situations
when the other party places little emphasis on the
relationship.

92

Avoiding: Individuals who do not like to negotiate and dont

do it unless warranted. When negotiating, avoiders tend to
defer and dodge the confrontational aspects of
negotiating; however, they may be perceived as tactful and
diplomatic.
Collaborating: Individuals who enjoy negotiations that involve
solving tough problems in creative ways. Collaborators are
good at using negotiations to understand the concerns
and interests of the other parties. They can, however,
create problems by transforming simple situations into
more complex ones.
Competing: Individuals who enjoy negotiations because they
present an opportunity to win something. Competitive
negotiators have strong instincts for all aspects of
negotiating and are often strategic. Because their style can
dominate the bargaining process, competitive negotiators
often neglect the importance of relationships.
Compromising: Individuals who are eager to close the deal by
doing what is fair and equal for all parties involved in the
negotiation. Compromisers can be useful when there is
limited time to complete the deal; however, compromisers
often unnecessarily rush the negotiation process and
make concessions too quickly.
Emotion in negotiation

93

Emotions play an important part in the negotiation process,

although it is only in recent years that their effect is being
studied. Emotions have the potential to play either a
positive or negative role in negotiation. During
negotiations, the decision as to whether or not to settle,
rests in part on emotional factors. Negative emotions can
cause intense and even irrational behavior, and can cause
conflicts to escalate and negotiations to break down, but
may be instrumental in attaining concessions. On the
other hand, positive emotions often facilitate reaching an
agreement and help to maximize joint gains, but can also
be instrumental in attaining concessions. Positive and
negative discrete emotions can be strategically displayed
to influence task and relational outcomes and may play out
differently across cultural boundaries.

94

Finance
There are various ways in which word finance is
used, like in economics it is considered as the
management of money while generally it is
attributed as an activity for providing funds.
Finance deals with the concepts of money, time
and risk and also their interrelationship. For
example, for starting a new business, finances
can be raised by two means; debt or equity.
In small and large companies there are different
functional departments and one common
department is the finance department. This
department manages the fund available to the
company. In this way finance deals with the
financial assets and the money transactions.
Finance is the life blood of business. If follows in
mostly from sale of goods and service. It flows
out for meeting various types of expenditure.

95

96

MANAGEMENT LEVEL
The term Levels of Management refers to a line of
demarcation between various managerial positions in an
organization. The number of levels in management
increases when the size of the business and work force
increases and vice versa. The level of management
determines a chain of command, the amount of authority &
status enjoyed by any managerial position. The levels of
management can be classified in three broad categories: Top level / Administrative level
Middle level / Executor
Low level / Supervisory / Operative / First-line managers
Managers at all these levels perform different functions. The
role of managers at all the three levels is discussed below:

LEVELS OF MANAGEMENT
Top Level of Management
It consists of board of directors, chief executive or managing
director. The top management is the ultimate source of
authority and it manages goals and policies for an
enterprise. It devotes more time on planning and
coordinating functions.
The role of the top management can be summarized as
follows 97

Top management lays down the objectives and broad policies

of the enterprise.
It issues necessary instructions for preparation of department
budgets, procedures, schedules etc.
It prepares strategic plans & policies for the enterprise.
It appoints the executive for middle level i.e. departmental
managers.
It controls & coordinates the activities of all the departments.
It is also responsible for maintaining a contact with the
outside world.
It provides guidance and direction.
The top management is also responsible towards the
shareholders for the performance of the enterprise.
Middle Level of Management
The branch managers and departmental managers constitute
middle level. They are responsible to the top management
for the functioning of their department. They devote more
time to organizational and directional functions. In small
organization, there is only one layer of middle level of
management but in big enterprises, there may be senior
and junior middle level management. Their role can be
emphasized as They execute the plans of the organization in accordance with
the policies and directives of the top management.
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They make plans for the sub-units of the organization.

They participate in employment & training of lower level
management.
They interpret and explain
management to lower level.

policies

from

top

level

They are responsible for coordinating the activities within the

division or department.
It also sends important reports and other important data to
top level management.
They evaluate performance of junior managers.
They are also responsible for inspiring lower level managers
towards better performance.
3.Lower Level of Management Lower level is also known
as supervisory / operative level of management. It consists
of supervisors, foreman, section officers, superintendent
etc. According to R.C. Davis, Supervisory management
refers to those executives whose work has to be largely
with personal oversight and direction of operative
employees. In other words, they are concerned with
direction and controlling function of management. Their
activities include Assigning of jobs and tasks to various workers.
They guide and instruct workers for day to day activities.

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They are responsible for the quality as well as quantity of

production.
They are also entrusted with the responsibility of maintaining
good relation in the organization.
They communicate workers problems, suggestions, and
recommendatory appeals etc. to the higher level and
higher level goals and objectives to the workers.
They help to solve the grievances of the workers.
They supervise & guide the sub-ordinates.
They are responsible for providing training to the workers.
They arrange necessary materials, machines, tools etc for
getting the things done.
They prepare periodical reports about the performance of the
workers.

They ensure discipline in the enterprise.

They motivate workers.
They are the image builders of the enterprise because they
are in direct contact with the workers.

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101

LAW
Law is a system of rules and guidelines which are
enforced through social institutions to govern
behavior, wherever possible. It
shapes politics, economics and society in numerous
ways and serves as a social mediator of relations
between people. Contract law regulates everything
from buying a bus ticket to trading on derivatives
markets. Property law defines rights and obligations
related to the transfer and title of personal and
real property. Trust law applies to assets held for
investment and financial security, while tort law
allows claims for compensation if a person's
rights or property are harmed. If the harm is
criminalized in legislation, criminal law offers
means by which the state can prosecute the
perpetrator. Constitutional law provides a
framework for the creation of law, the protection
of human rights and the election of political
representatives. Administrative law is used to
review the decisions of government agencies,
while international law governs affairs
between sovereign states in activities ranging
from trade to environmental regulation or military
action. Writing in 350 BC, the Greek
philosopher Aristotle declared, "The rule of law is
better than the rule of any individual.

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Legal systems elaborate rights and responsibilities in

a variety of ways. A general distinction can be
made between civil law jurisdictions, which codify
their laws, and common law systems, where judgemade law is not consolidated. In some
countries, religion informs the law. Law provides a
rich source of scholarly inquiry, into legal
history, philosophy, economic analysis or sociology.
Law also raises important and complex issues
concerning equality, fairness and justice. "In its
majestic equality", said the writer Anatole France in
1894, "the law forbids rich and poor alike to
sleep under bridges, beg in the streets and steal
loaves of bread. In a typical democracy, the central
institutions for interpreting and creating law are
the three main branches of government, namely an
impartial judiciary, a democratic legislature, and an
accountable executive. Law distinguish itself from
policy as laws are the standard rules and
regulations that are compulsory Policies are
objectives that an organization or a government
sets for itself. To implement and enforce the law
and provide services to the public, a
government's bureaucracy, the military and
police are vital. While all these organs of the
state are creatures created and bound by law, an
independent legal profession and a vibrant civil
society inform and support their progress.

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