Presentacion Capitulo 3 g Mankiw

The Stock Market
The stock market plays a significant role in the health of the economy. The economy has to be strong for its country and its citizens to prosper. The stock market appears in thenews every day. You hear about it any time it reaches a new high or a new low, and you also hear about it daily in statements like "The Dow Jones Industrial Average rose 2 percent today, with advancesleading declines by a margin of ..." Obviously, stocks and the stock market are important, but you may find that you know very little about them. What is a stock? What is a stock market? Where does thestock market come from to begin with, and why do people want to buy and sell it? If you have any questions like these, then this essay will open your eyes to a whole new world.
In the financialmarket, stock refers to a supply of money that a company has raised. This supply comes from people who have given the company money in the hope that the company will make their money grow. The term "stockmarket" refers to the business of buying and selling stock. The stock market is not a specific place, though some people use the term "Wall Street"--the main street in New York City's financialdistrict--to refer to the U.S. stock market in general.
If a company wants to grow--maybe build more factories, hiremore people, or develop new products--it need money. It could get a loan from a bank. Butthen it would owe money. By issuing stock, a company can raise money without going into debt. People who buy the stock are giving the company the money it needs to grow. Not every company can issuestock. A business owned by one person (a proprietorship) or a few people (a partnership) cannot issue stock. Only a business corporation can issue stock. A corporation has a special legal status. Likea school, its existence does not depend on the people who run it. Under the law, it is separate from the people associated with it, and has special legal rights and responsibilities as well as its...