Notes, summaries, assignments, exams, and exercises for Economics for Secondary education

Financial plan(planning)- process of managing your money to achieve personal economic satisfaction

Financial plan incorporates:

1.Formalized report-follows proper procedures, orderly,endorsed

2. Summarizes current financial situation-Now the way it is

3.Analyze financial needs- need to purchase for ?

4. Recommends future financial activities

5.Measure progress toward financial goals

STEPS FOR FORMAL FINANCIAL PLAN

1. Determine financial condition

2. Develop financial goals→ time frames

3. Develop courses of action-compare bettween different options, compare at risk and return, decide contionue or change course

4. Create and implement financial action

5. Review and revise as needed

6. semi-anually, annually, life changing event

Effective financial planning goals must be,

Fundamentals of Economic Activity

Economic activity is the combination of tasks undertaken by people in order to obtain the goods required to meet their needs. These goods can be material, such as food, manufactured items, and cars; or immaterial, such as education and health care.

Key Economic Indicators and Units

Business Ethics and Corruption in Spain

Introduction

This study analyzes business corruption in Spain, focusing on its origins and development. This report highlights two key dimensions: the causes and the effects of business corruption within the country.

Causes of Business Corruption

The primary cause of business corruption stemmed from exploiting the pre-crisis situation. The price of housing was well above its real value, a direct consequence of the inmobiliaria bubble. Furthermore, banks were granting high-risk mortgages without sufficient endorsement, famously known as subprime mortgages. While the risk of non-payment for these loans was exceptionally high, the profitability banks obtained was equally significant.

Another ethically incorrect...

Financial Markets and Financial Intermediaries

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Financial Market (Direct)

• Short-Run (Money Market): CD, CP, RP (maturity within 1 year)
• Long-Run (Capital Market): Stock, Bond (maturity over 1 year)

Financial Intermediary (Indirect): Bank, mutual fund

Bonds

Bond (debt certificate): National and public bonds, corporate bonds, financial bonds

• Maturity: Repayment; no repayment means default
• Credit Rating: High risk leads to high return

Stocks

Stock: A claim to partial ownership of a corporation

Listing (상장)

• Only high-quality companies
• Advantage: Easy to raise funds
• Disadvantage: Vulnerable to M&A (mergers and acquisitions)
• Unlisted companies: stock trading is difficult

PER (Price-Earnings Ratio)

PER = Stock price / Earnings per share (EPS)

It shows how...

Chapter 2: Market Fundamentals

Definition of Market, Equilibrium, and Adam Smith

A market economy operates on the principles of a free market, characterized by minimal government regulation and self-regulation, where consumers and producers drive decision-making. Market equilibrium occurs when price and quantity are balanced, aligning supply and demand.

Adam Smith's Key Theories:

• Advocacy for a free market without government intervention.
• The concept of the invisible hand.
• Recognition as the founder of microeconomics.
• The observation that individuals act out of self-interest.

How Markets Solve Economic Problems

1. What goods and services are produced? Consumers pay for what they value, while firms maximize revenue by satisfying customer needs.
2. How are things

Core Economic Concepts

Macroeconomics: The study of the economy as a whole.

Microeconomics: The study of individual parts of the economy.

Macroeconomic Objectives

The aims of a government relating to key economic performance indicators, such as:

• Economic growth
• Inflation
• Unemployment

The Economic Cycle

• Boom: The peak of the economic cycle where GDP is growing at its fastest.
• Downturn: A period in the economic cycle where GDP grows, but at a slower rate.
• Recession: A less severe form of depression.
• Depression (or Slump): The bottom of the economic cycle where GDP falls, accompanied by significant increases in unemployment.

National Income and GDP

• Economic growth: The increase in national income over time.
• GDP: An internationally recognized measure of national

Oligopoly Market Analysis

Defining Oligopoly and Market Concentration

Market Share Data

The combined market share of the four largest grocery firms is 76%.

Oligopoly Definition

An oligopoly is a market structure where a few large firms dominate the market.

Competitive Strategies in Oligopolies

Price Competition Tactics

Price competition occurs when a firm reduces prices to gain customers from rival firms or to make goods more affordable. Examples include:

• Reducing the base price.
• Offering special deals (e.g., Buy One Get One Free (BOGOF) offers).

Non-Price Competition Methods

Firms utilize non-price competition to attract and retain customers without lowering prices. Methods include:

• Advertising and marketing campaigns.
• Using loyalty cards to encourage repeat

Financial Motivations

• Salaries: Fixed amounts per month or year for performing a role; these are common for most managerial positions.
• Fringe Benefits: Very common in businesses of all kinds; these include staff discounts, contributions to travel costs, and staff uniforms.
• Piece-rate Pay: Pay per item produced; becoming less common.
• Commission: Payment based on the value of sales achieved.
• Bonuses: Rewards for achieving specific targets.
• Shares and Options: Less common in small businesses, but popular in businesses whose shares are traded on stock markets.
• Pensions: Becoming less common and generous. Small businesses tend not to offer pension benefits.
• Non-Financial Incentives: Job enlargement, job rotation, job enrichment, teamwork, and empowerment.

Sources of Finance

Internal Sources

• Retained profit
• Sales of existing assets
• Reduction of stock levels

External Sources

Long-Term

• Shares
• Debentures
• Long-term bank loans
• Grants
• Leasing and hire purchase
• Medium-term bank loans

Short-Term

• Bank overdrafts
• Bank loans
• Creditors
• Debt factoring
• Trade credits

Profitability Ratios

Net Profit Margin

Formula: Net Profit / Revenue

This represents the percentage of revenue remaining after all expenses have been deducted from sales. It reveals the amount of profit a business extracts from its total sales.

Gross Margin

Formula: (Revenue - COGS) / Revenue

A profitability ratio that measures how much of every dollar of revenue is left over after paying the cost of goods sold.

Business Planning and Structure

Business Plan

A formal statement...

National Healthcare Privatization Debate

In Spain, healthcare service is public. In my opinion, this service should be public worldwide so that the sick or the poor will not face difficulties in receiving treatment. Public healthcare offers significant advantages:

• It guarantees healthcare for all citizens, including those with limited financial resources.
• Pharmaceutical services are free for pensioners and their beneficiaries.
• Public health services often possess more human and technical resources, leading to superior medical care quality compared to private services.

Conversely, private healthcare often presents notable drawbacks:

• It generally does not cover chronic diseases, even if they appear after the insurance policy is contracted.
• Most private