Notes, summaries, assignments, exams, and problems for Economics

The Entrepreneur

An entrepreneur is a person who takes the initiative and assumes the risk in a company. This individual may be referred to as an autonomous social agent and is a leader in a cooperative or commercial enterprise.

Concept of Business

A business is an economic production unit whose purpose is to create or increase the utility of goods and meet human needs. The end goal of the company is to achieve the objectives it has set, seeking to maximize its benefits.

Company Features

• Common: Accounting, financial, administrative, and HR.
• Specific: Commercial, production, research.
• Other: Technical, security, R&D.

Elements of a Company

• Internal:
  • Materials: Land, buildings and installations, machinery and transport elements, stocks, money, clients,

Understanding the Balance of Payments

The Balance of Payments (BOP) is a systematic record of all economic transactions, both real and financial, between the residents of one country and the rest of the world during a specific period. The accounting is determined by specific criteria.

Accounting Criteria

The actual operations of the balance of payments are recorded in terms of income from payments and financial transactions, reflecting changes in liabilities and asset variations (VA). Balances are derived from these columns by calculating the differences between expenditure and revenue, and between changes in liabilities and asset variations. The annotation criterion used is a systematic record that departs from the double-entry method.

Effects

The Welfare State: Pillars and Purpose

The Welfare State's core pillars are based on:

• Social security coverage and healthcare benefits.
• Redistribution of income.
• Eligibility for financial assistance in difficult situations, such as widowhood or unemployment.

Microeconomic Goals and Policy Instruments

Objectives:

• Economic efficiency
• Equity

Policy Instruments:

• Subsidies
• Tax breaks for companies
• Price controls
• Regulation of surpluses

Expansionary Fiscal Policy

Expansionary fiscal policy aims to increase aggregate demand. When new demands emerge, the aggregate demand curve shifts to the right. This policy is often employed during economic recessions to stimulate the economy and boost employment levels.

Mechanisms:

1. Increased Government Expenditure (G): An increase

Banking Financial Intermediaries in Spain

Banks, thrifts, and credit unions constitute the Spanish banking system. These entities are financial intermediaries. The primary differences between them lie in their legal structure:

• Banks: Private companies aiming to generate profits for their owners.
• Savings Banks: Non-profit entities allocating profits to charitable and social causes.
• Credit Unions: Members are depositors who benefit from their financial services.

Regarding services, the typical activities of these banking intermediaries are very similar: deposit-taking and lending.

Market Failures

1. Cycles: The market is criticized for failing to ensure stable economic growth.
2. Externalities: Many economic activities generate external effects on society

International Trade: Free Trade vs. Protectionism

Free Trade

Free trade is the doctrine that defends commercial transactions between two or more countries conducted without impediments. To boost international trade, governments use these tools to promote exports:

• Official bodies: They offer advice to exporters. In Spain, this is done by the Institute of Foreign Trade and Chambers of Commerce.
• Financial assistance: This is provided in the form of export loans.
• Grants: These support businesses.

Protectionism

Protectionism is an economic policy that supports the establishment of barriers to free trade among countries to safeguard national production. Protectionist measures aim to protect national industry and agriculture, which can be adversely affected...

The economic landscape of Spain under the Franco regime, particularly up to the late 1950s, was profoundly shaped by several factors. These included the devastating economic effects of war (such as a fall in production, depletion of gold reserves, increased debt, deterioration of transport infrastructure, and a reduced workforce), the international situation (marked by World War II and subsequent isolation), and the Francoist ideology of nationalism. These elements collectively led to a prolonged period of economic autarky.

Social Aspects and Public Life

During this period, public life often featured events like processions, including those organized by children's Social Aid initiatives, reflecting the regime's social policies.

The Autarkic Period

Production: A Three-Point View

Production can be defined in several ways:

• Economic: The development of products from basic productive resources by companies, to be purchased or consumed by households.
• Technical perspective: A combination of elements, such as labor, raw materials, machinery, energy, and direction, based on monitoring and observation of procedures (technology) to obtain goods or services.
• Utility-function perspective: A process that adds value to things, creating useful goods; in other words, it adds value.

Productive Factors

To produce, a series of elements need to be combined:

• Natural Resources: Raw materials, supplies, and energy.
• Labor: The workforce or the time that workers dedicate to production/service.
• Capital: The set of necessary

Wages: Wages are the remuneration for work performed. The demand for labor influences wage levels. The mechanism of job creation is driven by companies. The quantity of labor demanded depends on factors such as:

• The level of wages and the price of goods and services.
• The productivity of the worker relative to the wage level.
• The characteristics of the population.

Employment Policy

Employment policy encompasses a set of plans aimed at reducing unemployment within an economy. Before implementing such policies, it's crucial to understand the characteristics of the population.

Population Characteristics

Population characteristics can be categorized based on their degree of participation in the production process:

• Working-age population: Individuals aged

Limited Companies

Known as joint-stock corporations in the USA, these entities are owned by shareholders who benefit from limited liability. They possess a separate legal identity. When a company folds, shareholders are paid dividends.

Private Limited Company (Ltd)

• Often small businesses
• Up to 50 shareholders
• Shares not sold to the general public

Public Limited Company (Plc)

• Shares sold to the general public on the stock exchange
• Two shareholders required to start
• All shareholders must agree to sell further shares

Advantages

• Limited liability
• Easier to raise capital
• Separate legal identity
• Continuity of management
• Can operate on a large scale

Disadvantages

• Expensive and complicated
• Strict regulations
• Privacy and mutual concerns

Cooperatives

Voluntary business organisations...

Forward Rate Agreements (FRA)

A Forward Rate Agreement (FRA) is a contract where two parties fix the interest rate today for a future loan without exchanging the principal amount. At settlement, they only exchange the difference between the agreed and market rates, primarily to hedge interest rate risk.

Initial Public Offering (IPO)

An IPO (Initial Public Offering) is the first public offering of a company’s shares. It marks the first time a company sells its shares to the public and becomes listed on a stock exchange. Therefore, an IPO takes place in the primary market, as the shares are offered to investors for the first time.

The IPO process normally includes:

• The decision by the Board and the General Shareholders’ Meeting
• The submission of