Notes, summaries, assignments, exams, and exercises for Economics for Baccalaureate

Case of Exemption (Article 22 TRLIS)

The assumption is a Spanish company with a permanent establishment abroad that carries on business that is subject to a foreign tax similar in nature to Spanish corporate tax.

The consequence is the exemption of income from the activity obtained abroad by the Spanish company.

For example, “Ceramics La Plana”, based in Castellón, has a subsidiary called “Ceramics-Argentina” whose headquarters is in Buenos Aires. The income obtained and taxed in Argentina is exempt from Spanish corporate tax.

Case of Tax Credits (Section 32 TRLIS)

This applies when a Spanish company has interests in a foreign company that earns profits taxed abroad by a tax of a similar nature. This is taken into consideration even if

Types of Business Concentration

Based on Production Phases

Horizontal Merger

Occurs when companies within the same sector or performing the same processing or manufacturing stage combine.

Vertical Concentration

Involves the grouping of companies engaged in different phases of the production process, increasing industry supply through complementary products.

Conglomerate Merger

Characterized by multi-sectoral diversification.

Cartel

A formal agreement between firms to reduce or eliminate market competition, often controlling production and distribution.

Trust

The union of different businesses under central management to control product sales and marketing.

Holding Company

Controls other companies' activities through ownership of their shares.

Characteristics

Understanding the Balance of Payments

What is the Balance of Payments?

The Balance of Payments (BoP) is a comprehensive set of statistics used to measure trade in goods, services, and assets between one country and all other countries. It is structured into two main blocks: the Current Account and the Financial Account.

The Current Account

The Current Account primarily tracks the flow of goods, services, and income between a country and the rest of the world. It includes:

• Balance of Goods and Services: This shows the difference between goods and services sold abroad (exports) and bought abroad (imports). It is composed of two components: the balance of services and the balance of trade. The latter specifically covers exports and imports of goods

1. Accounting and Information Systems

A) Accounting

Accounting is the science of tracking an entity's transactions, providing insights into the company's financial and economic situation at any given time.

• Financial Instruments, Accounting Records, and Bookkeeping: The recording of transactions is made through double-entry bookkeeping, which consists of a dual movement. The types of accounts include economic and management accounts.

2. Concept of Heritage (Assets, Rights, and Obligations)

Heritage refers to a set of assets, rights, and obligations. This includes everything that fulfills a need (assets), all that is owed to the company (rights/receivables), and what the company owes to third parties (obligations/liabilities).

A) Organization of Heritage

• Assets:

Fundamentals of Market Economics

Core Economic Definitions

Market

The means by which individuals or groups wishing to acquire a particular good or service connect with those who wish to sell it.

Barter

The direct exchange of goods and services without the intervention of money.

Money

A medium of exchange and legal tender, generally accepted by society.

Price

The value of a good or service specified in monetary units.

The Three Pillars of the Market

The functioning of the market rests upon three essential elements:

• The Bidders (Sellers/Suppliers)
• The Demanders (Buyers/Consumers)
• Prices

Requirements for a Functioning Market

For a market system to operate effectively, several requirements must be met:

• The existence of "free markets."
• Private property rights over

Strategic Business Location and Dimension

Choosing a suitable place for company implementation requires assessing a number of external variables:

1. Market Demand: Analyze if there is interest in the product in the desired area and assess the competitive landscape.
2. Raw Material Procurement: Evaluate the quality, cost, and ease of obtaining raw materials.
3. Labor Market: Consider potential employees, their skills, and labor costs.
4. Communications and Transportation: Assess accessibility for transport and communication with other businesses.
5. Utilities and Supplies: Information on the availability and cost of essential supplies for company operations.
6. Construction and Land Costs: Note that prices vary significantly from place to place.
7. Legislation and Regulations:

Classifying Business Funding Sources

Funding sources can be classified based on different criteria:

a) Ownership of Funds

This criterion considers the ownership of the funds used to finance business activities:

• Self-financing: Sources of funding that belong to the shareholders, including share capital, reserves, and undistributed company profits.
• External Financing: All debts incurred by the company to finance its activities, which must be returned with interest to their rightful owners (e.g., credit debts, obligations, suppliers, creditors).

b) Duration of Employment

This criterion distinguishes between two types of resources based on their permanence within the company:

• Permanent Resources: Funds with a degree of permanence, either not returned or

Economic Activity and Key Economic Concepts

Economic activity is aimed at satisfying human needs using scarce resources in accordance with the principle of optimization. Microeconomics focuses on analyzing the behavior of economic agents taken into account individually: families, companies and the relationships established between them through the market. Macroeconomics is the part of economics that studies the economy as a whole. It analyzes the behavior of macroeconomic variables obtained from the sum of the actions of individual economic agents: national product, national income, consumption, investment, etc.

Human Needs and Classification

Human needs are commonly classified into different types. Understanding these distinctions helps explain...

Functions and Demand for Money

Key Functions of Money

• Medium of Exchange: Without a universal means of payment, transactions would be limited to the exchange of goods, i.e., barter.
• Store of Value: Money is a durable asset that allows the holder to defer the decision to use it and store it as desired.
• Unit of Account: The economy measures the value of things in monetary terms, enabling comparisons and associations between them.

Factors Influencing Money Demand

• Average Price Level: If the price level rises, people will demand more money to maintain their purchasing power.
• Real Income and Wealth: An increase in income or wealth increases people's purchasing power and, consequently, their demand for normal and luxury goods.
• Market Interest Rate: The interest

Investment Definition

To perform activities, a company needs a set of elements or factors of production. Thanks to the savings of different economic agents, companies can obtain the resources they need to carry out their investments and thus become eligible for benefits.

According to Pierre Massé: "Investment is the act whereby there is a change of instant gratification and a certain resignation to that for the hope that is acquired, of which the asset acquired is the support." Investment enables business growth.

Selecting Funding Sources

Several factors influence the selection of funding sources:

• The Type of Investment

  For financing current assets, funding sources may be short-term. However, if the asset is expected to remain with the company for