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

Understanding the Balance of Payments

The Balance of Payments (BOP) is a systematic record of all economic exchanges that take place between residents of a country and the rest of the world during a specific period. Its operations are grouped, depending on their nature, into three main sections, often referred to as sub-balances:

Current Account

This account reflects the movements of goods and services between a country and the rest of the world. It comprises:

• Balance of Trade: Records the value of all goods that residents of a country buy from and sell to other countries (exports and imports of merchandise).
• Balance of Services: Records the value of all services provided to residents of other countries and received from them (e.g., tourism, transport,

Balance Sheet Fundamentals

Assets

Non-Current Assets

• Intangible Assets: Such as application software.
• Fixed Assets: Including land, buildings, machinery, furniture, and transport. Amortization items are typically negative values.

Current Assets

• Inventories: Merchandise held for sale.
• Trade and Other Receivables: Amounts owed by clients.
• Cash and Cash Equivalents: Funds readily available in cash, bank accounts, or other liquid forms.

TOTAL ASSETS

Equity and Liabilities

Equity

• Shareholders' Equity: Comprising capital stock, legal reserves, accumulated profit or loss, and other own contributions.

Non-Current Liabilities

• Long-Term Debt: Obligations due in more than one year.

Current Liabilities

• Short-Term Liabilities: Including amounts owed to suppliers and other

Multinational Development Factors (Reasons)

The expansion of multinational corporations is driven by several key factors:

• Creating New Markets: Expansion occurs to enter markets where the company is not currently present, or to capture markets that require a direct local presence for access.
• Leveraging Competitive Advantage: Some companies establish operations abroad to take advantage of local resources, such as raw materials. Other motivations include exploiting lower operating costs, benefiting from favorable tax regimes, or capitalizing on weaker social or environmental protections.
• Technology or Declining Product Transfer: For companies producing products requiring significant investment or possessing mature technology, moving production to

Key Financial Instruments Defined

Financial instruments represent various forms of capital and debt used by companies to manage operations, fund growth, and secure liquidity.

Capital and Equity Instruments

• Contributions of the Partners (Capital Increase): This involves making a social capital increase of the company, allowing existing shareholders and new partners to subscribe to new shares or securities.
• Reserves: These are amounts derived from undistributed company profits. Reserves are typically used by the company for future investments, contingencies, or to strengthen the balance sheet.

Debt Instruments and Credit

• Loans: These are contracts between the company and a financial institution whereby the company receives the full requested amount

Functioning of the Economy Overall

The set of macroeconomic objectives can be summarized in one: to achieve a growth rate of the economy that satisfies needs more and more, ensuring full employment of resources and maintaining stable prices.

An Overall View

• The internal forces of the market: changes in population, consumer behavior and investment, and technological innovation.
• The external shocks: political and military conflicts between countries, droughts, and natural disasters.
• The performance of governments to direct and control the economy through fiscal policy, monetary policy, and external policy.

Aggregate Demand and GDP

The forecast cost of a global economy is known as aggregate demand because it is an aggregation or sum of the demand for...

Optimizing the Business Value Chain

Optimizing the value chain is a primary objective for any company. This analysis involves breaking down global business activities into distinct parts to identify sources of competitive advantage. By isolating specific functions that add value to products or services, firms can maximize profitability by eliminating superfluous costs.

Core Value Chain Elements

• Primary Activities: Processes directly related to the development of the company's goods or services.
• Support Activities: Functions that facilitate primary activities, such as technology development and financial management.
• Margin: The difference between the actual value generated and the total costs incurred by the company.

Key Factors in Business Performance

Every...

Item 16: International Economic Organizations

The Role of Global Economic Institutions

The liberalization of world trade has been and remains the primary objective of these institutions. Key international economic organizations include:

• International Trade Organization (ITO): An organization that never materialized, but its principles were incorporated into the General Agreement on Tariffs and Trade (GATT), which later became the World Trade Organization (WTO) in 1994.
• World Bank (WB): Formed from the International Bank for Reconstruction and Development (IBRD). Through this body, the WB offers soft loans to countries seeking to accelerate their economic growth.
• International Monetary Fund (IMF): Its mission is to operate a system of exchange rates

Human Development Indicators

The United Nations published the Human Development Index in 1990. It takes into account GDP, life expectancy, literacy rates, and school enrollment.

Another indicator, sometimes discussed in the context of preparing for the future, considers economic growth, income per capita, health spending, technological development, education level, youth unemployment, poverty, social inequality, and corruption.

Vocabulary

• Other things equal (Ceteris Paribus): The variations that occur between supply and demand for a good or service caused by a change in its price, assuming all other factors remain unchanged.
• Model: A representation of a determined reality. The main limitation is that the number of variables used should be very small.

Company's Own Resources

Capital

Capital consists of contributions from partners during the formation of the company, and can also increase through successive capital injections. These contributions can come from both individuals and other companies.

In some cases, SCR (Venture Capital) firms provide funding for the creation, expansion, or development of new projects for enterprises. When the company receiving the investment begins to grow in value, the SCR firm may sell its stake to recover its investment and earn a profit.

Reserves

Reserves originate from earnings retained by the company and form part of its internal self-financing. Essentially, reserves are the profits that remain within the business. These reserves can be used to make new investments,...

Understanding Business Investment

An investment occurs when a business sacrifices financial resources today with the expectation of obtaining future compensation. While investment seeks to maximize resources, financing focuses on attracting them. Investments are linked to both the capital cycle and the cycle of exploitation.

Characteristics of an Investment

An investment is initiated at a specific time with the expectation of future results. The investor aims for compensation, though the outcome is never guaranteed.

• A) Liquidity: The time elapsed from the initial investment until results (cash) are generated. Higher liquidity means the asset can be converted to cash more quickly.
• B) Performance: The comparison between the financial resources employed