Question #4: The goal of a firm is to maximize profits? Do you agree? Explain.

The goal of a firm is to maximize profits, however, not if it harms the value its products, customers, economy and/or the environment. In today’s business world, companies are now awarding bonuses based primarily on quarterly sales, profit increases, etc. This profit-maximizing obsession has caused managers to lower wage hours, and employees to focus more on sale targets and less on customer satisfaction. Major corporations whose employees generate them billions of dollars a year in profits are still offering minimum wage to perform their duties. “Wal-Mart employs 1.4 million Americans, approximately 1% of the entire American workforce. The average full-time Wal-Mart associate makes $12 an hour--$480 a week and $25,000 a year. That's just above the poverty line.” According to “MarketWatch.com”, Wal-Mart generated almost $25 billion dollars (before taxes) last year in profits, while paying their employees a measly $4.5 billion in process. This is a selfish way of operating and a greatly disagree with it. Companies should invest more into its employees, the planet, and the economy and less in maximizing profits.

Question #1: What is financial innovation? Illustrate with two examples how financial innovation has led to the growth of credit and expansion of economic activity.

Financial Innovation can be defined as the creation of new technological instruments and payment systems that have increased the availability of credit providing banks and borrowers with easier, less risky ways of generating, lending and borrowing equity. An example of this is Microcredit - A way for borrowers to receive small loans without having to put up much collateral. Its overall growth is key to decreasing poverty domestically, and internationally in developing countries.
Another very important