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

Defining Operations Management (OM)

Operations Management (OM) manages the resources and the transformation processes needed to produce the company's products and services. It involves managing people, machines, and information. OM is the business function responsible for planning, coordinating, and controlling the resources needed to produce products and services for a company.

Key Decisions Operations Managers Make

Operations managers must plan the production schedule. This entails deciding how much to produce and in what order. This information is used:

• To make purchasing and staffing decisions.
• Operations managers must manage inventory.
• They must arrange the inventory in the warehouse.
• Operations managers must also manage quality levels.

The Transformation

1. Keynes’ Liquidity Preference Theory and Interest Rates

According to Keynes’ Liquidity Preference Theory, what determines the overall level of interest rates in the short run? Based on that theory, what should a central bank do when it wants to lower interest rates? Explain.

The equilibrium condition is defined as: Ms/P = Ld (r* + πe, Y).

Basically, this implies that a central bank can reduce the real interest rate (r*) in the short run by increasing the money supply (Ms). To re-establish equilibrium, real money demand must increase, which requires the real interest rate to fall.

3. Stock Variables vs. Flow Variables in Macroeconomics

Describe the difference between stock variables and flow variables in macroeconomic models. Categorize the...

Neoliberalism can be contemplated from three different points of view.

Neoliberalism as an Ideology

First, it is an ideology. Here, the student must summarize the main ideological points and compare them with the tenets of Keynesianism to understand the economic and political changes we are living today.

Neoliberalism as a Mode of Governance

Second, it is a mode of governance, that is, it is a conception about how the role of government should be. In a few words, governments have to imitate the principles and values of free markets. The most significant consequence is that governmental technologies taken from the world of business and trade are replacing the pursuit of some ideal of the ‘public good’ which characterized the Welfare State.

Neoliberalism

Types of Inventories

• Materials and supplies
• Work in process
• Finished products

Production Costs of Goods in Process

When initial products are in the factory process, they should be added to manufacturing costs. The formula is as follows:

CFAB = CMD + CMI + CMOD + CMOI + OCI + (IFPP - IIPP)

Understanding Labor Overruns

These represent all costs that the company is "forced" to assume when a worker is on the payroll and has a regular full-time job.

Fixed and Variable Costs

Fixed Costs

Fixed costs are those whose amount remains unchanged over a period of time. Example: Rent is a fixed cost because, regardless of the number of units produced, the payment is always the same.

Variable Costs

These are called variable because the cost varies in direct proportion...

Work Documentation and Labor

• Ballot work: A format prepared daily by the employee for each task.
• Labor: Physical or mental effort used in the manufacture of a product.
• Timecard: A record of total hours worked each day by an employee.

Inventory Management Systems

• Periodic inventory system: A system requiring a physical count of items to calculate final inventory and the cost of materials used.
• Perpetual inventory system: A continuous recording of inventory additions and deductions.

Production Capacity and Costs

• Expected capacity: Based on estimated production for the next period.
• Normal capacity: Based on practical, demand-adjusted long-term production.
• Theoretical capacity: The maximum production a department is capable of achieving.
• Fixed CIF: Costs

1. Business Purpose of Information Systems

Information systems enable companies to increase revenue or reduce costs by providing data that helps managers make better decisions and improve business process performance.

• Data Transformation: Raw data is processed through various stages to add value.
• Value Determination: The value of an information system is determined by its ability to facilitate better decision-making, increase administrative efficiency, and drive higher profitability.

2. Maximizing Value from Information Systems

Companies that support technology investments with complementary assets achieve superior returns. These assets are essential for realizing the full value of major investments.

Organizational Investments

• Appropriate business

Understanding Unemployment

The term unemployment refers to the lack of work. An unemployed person is one who is part of the labor force seeking employment but without success. The constant movement of the working population, as a feature of modern economics, is one of the main reasons for unemployment, even when we are at full employment.

Types of Unemployment

There are several types of unemployment, the most significant being frictional and structural unemployment.

Frictional Unemployment

Frictional unemployment is caused by workers who invest time in finding employment. This type of unemployment is inevitable, as there is a constant process of job creation and destruction, along with a steady inflow of new workers into the labor market. When there...

Economic Impacts and Financial Dynamics

b) Exchange Rates: Higher interest rates and rising exchange rates are two sides of the same currency. The takeoff of the Spanish exchange rate significantly impacted tourism, exports, and pressures against the peseta.

c) The Cost of Public Debt: The public sector faced a special surcharge for its debt obligations.

d) Speculative Capital Attraction: The economy became a magnet for speculative capital.

Global Economic Context

• Intense and Prolonged Recession: Driven by the debt burden of financial restructuring in the U.S., economic shifts in Japan, and the consequences of German reunification.
• European Integration Challenges: Following the Maastricht Treaty and the liberalization of capital movement, the region

The Spanish Economic Crisis: 1975-1985

During this period, the Spanish economy faced its first major crisis, characterized by a superposition of partial crises that ended a long period of expansion. Key factors included:

• The breakdown of the international monetary system: Agreed at Bretton Woods in 1944 and based on exchange rate stability, its collapse led to fluctuating exchange rates for all currencies, the loss of the dollar's leadership, and consequent international instability and uncertainty.
• Rising commodity prices: An increase in world prices for food, agricultural, and industrial raw materials.
• The oil shock: The most significant factor was the substantial growth of oil prices between 1973 and 1974.

Factors of the Differential Crisis

• a)

Macroeconomic Policy Analysis: Corrientes

True, False, or Uncertain: Economic Concepts

1.1 IS-LM Model: Fiscal Policy Effectiveness

In the context of the IS-LM income determination model, an expansionary fiscal policy based on an increase in spending will be more effective (i.e., expand output more) to the extent that the real money demand is less sensitive to the level of output. (15 pts.)

Answer to 1.1

True

The less sensitive the demand for money is to income, the less the expansion of the transaction component of money demand. Given this, the excess money demand caused by fiscal policy will be comparatively lower, implying a more moderate increase in interest rates. Interest rates will rise less, making the crowding-out effect smaller and the...