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

Financing of Enterprises

Self-financing resources are stable company funds that do not require repayment or interest payments.

A) Contributions from Owners

When individuals buy shares, the company receives resources to finance its activities. In exchange, shareholders obtain the right to participate in business management and share in variable profits (dividends).

B) Reserves

These are undistributed profits that remain in the company as a form of self-financing. These funds allow for new investments and promote company growth.

External Financing

Companies often require resources beyond what self-financing provides.

A) Commercial Credit

This is automatic financing obtained when a company delays payment to its suppliers, providing time to sell products...

What is Inflation?

Inflation is the loss of value of a currency. It is used to quantify the purchasing power lost through price increases or other economic events.

Main Causes of Inflation

• Increase of money in circulation: This may be caused directly by the government or by central banks lowering interest rates.
• Increased demand: A rise in demand for goods and services, generally associated with job creation.
• Decreased supply: A reduction in the supply of property or goods, usually occurring when there is unemployment and failures in the production system.
• Increased raw material prices: Price hikes in derivatives affect all sectors.
• Energy price increases: This mainly affects the transport and industry sectors.

Problems Caused by Inflation

Pensions...

Monetary Policy Fundamentals

Monetary Policy is the set of actions undertaken by monetary authorities to monitor changes in the amount of money and the interest rate. This should seek a joint and coordinated action. The macroeconomic objectives are to operate equally with other intervening variables determining monetary targets or a very complex interrelationship between the financial system and the real economy.

Monetary Targets and Objectives

Monetary targets, in turn, are instrumental to achieve the ultimate objectives, which are:

• To balance the level of money supply or amount of money available.
• To control interest rates for operations.
• To manage exchange rates or equivalence relation to other currencies.

The action of monetary policy seeks to...

Agricultural Market Systems

Market Agriculture (also called speculative agriculture) is typical of industrial countries where production is regulated by market prices and intended primarily for commercial marketing.

Traditional or Subsistence Agriculture (also known as peasant or family farming) focuses production on feeding the family and working cattle. The remaining surplus, which is generally very small, is offered for sale in local markets.

Land Tenure and Operating Systems

• Sharecropping: An operating system involving payment as a percentage of the harvest, usually based on an oral agreement between the owner and the worker.
• Lease: A land tenure contract between a landowner and a tiller, consisting of the transfer of land in return for a rental

Maximizing Sales Through Strategic Marketing

If all the above principles are met, advertising will achieve its primary objective: the sale.

Sales Promotion

Sales promotion consists of business activities designed to increase product sales over a short period. Examples include offering a small gift with a purchase or a two-for-one deal.

Personal Selling

The sales staff aims to inform, persuade, and convince the customer to buy the product through direct contact. Unlike advertising, personal selling requires an individualized oral message and allows for an immediate response.

Public Relations

Public relations involves planned activities to create, promote, and maintain a positive corporate image. Instruments to improve this image include collaborating...

The European System of Central Banks (ESCB)

The ECB and national central banks of EU member countries form the European System of Central Banks (ESCB). Its function is to define and implement the single monetary policy in the countries that have adopted the euro.

The Eurosystem

The Eurosystem consists of the ECB and the national central banks of the countries that have adopted the euro.

ESCB Functions

• Define and implement monetary policy in the euro area.
• Conduct foreign exchange operations.
• Hold and manage the official foreign reserves.
• Ensure the smooth operation of payment systems.
• Maintain financial stability.
• Authorize the issuance of banknotes.

Monetary Policy

Monetary policy is a set of actions by monetary authorities to adjust interest rates or...

Autarky, Rationing, and Economic Policy

Autarky and rationing: One of the main objectives of the first stage was achieving economic self-sufficiency. This promoted an economic policy of insulation from the exterior and the replacement of the free marketplace by state intervention in the economy, justified with fascist and patriotic rhetoric. Autarkic policy had three stages of action.

1. Regulation of foreign trade: Imports and exports were completely controlled by the state. This measure restricted foreign exchange and reduced imports of goods considered essential. The result of these restrictions was higher prices and severe shortages of consumer goods.

2. Development of industry: A series of laws favored the creation of public enterprises and the

Market Failures

• Imperfect Competition
• Externalities: When production or consumption directly affects consumers or businesses not participating in the purchase or sale.
• Imperfect Information
• Negative Externalities: Markets produce a larger amount than socially desirable.

Internalize an Externality: Alter incentives for people to take into account the external effects of their actions.

Permits or Licenses: Allow targets of pollution with lower costs and direct controls.

• Positive Externalities: Markets produce a smaller amount than socially desirable. It is inefficient; the benefit to the parties is greater than the cost of parts.
• Public Goods: Goods that everyone can enjoy without being excluded, and the cost of consumption is zero. Benefit to the community

The Tertiarization Process of the Spanish Economy

The tertiarization process of the Spanish economy involves the tertiary or service sector, which encompasses a wide variety of activities of all kinds that have in common not producing material goods of any kind. Spain has a service economy, and most of the jobs come from this sector. In Spain, we are experiencing a process of economic tertiarization, which is a recent process; the growth of employment is closely related to the increasing incorporation of women into paid employment.

Causes of the Growth of Services

The rapid growth is the result of the profound changes experienced in Spanish society, which have the following characteristics:

• It is a consumer society in which the rise in income levels

The Twenty Happy Years in the U.S.

Big Growth and Industrial Practices (1920s)

• Intense industrial expansion: Export production and active economic investment practices.
• Dense development of industries (electrical, chemical), especially the automotive sector.
• Generalization of mass production, thanks to new work systems like Fordism and Taylorism.
• Massive purchase of new systems fueled by advertising.

Situation in Europe

• France and Germany saw industrial production increase due to reconstruction efforts.
• France based its growth on new sectors (electricity, automobiles).
• Germany grew using funds received from the U.S. and U.K., often incurring significant borrowing.
• In Britain, industrial stagnation persisted due to the high value of the pound, which hindered