Notes, summaries, assignments, exams, and exercises for Economics for Vocational training

The Fundamentals of Banking

Banking has evolved over many years. The word banking comes from the Italian word “banco.”

Definition of a Bank

Banks are the institutions responsible for the custody, loan, or exchange of money. Money is accepted in their own current or deposit accounts.

Core Functions of Banks

The primary functions of banks include:

• Transferring funds for payments.
• Discounting drafts and bills.
• Transferring funds for investments.

Types of Bank Accounts

• When people wish to leave money with the bank for quite a long time, they put the money in a deposit account.
• When a current account is opened, the depositor receives a cheque book.

Bank Services and Payments

In a bank, customers can pay various bills and obligations, such as electricity...

Leasing vs. Renting Comparison

• Leasing: Can be performed on movable and immovable property. Maintenance of the goods falls on the tenant. Minimum duration: 2 years for movable property and 10 years for immovable property. There are certain time limits on the amount deducted.
• Renting: It can only be performed on movable property. The maintenance of the property falls on the lessor. There is no minimum duration. The fee is deducted in full.

Loan vs. Credit Comparison

• Loan: You receive the entire loan from day one. Interest is paid on the first day and the total amount over the year. If you return the money in advance, you suffer a penalty. It is used to pay for purchases or investments, never to address a lack of liquidity.
• Credit: It makes money

1. The Role of the Financial System

The primary role of the financial system is to channel savings from surplus economic units to deficit economic units. Because these two groups cannot always connect directly, financial intermediaries emerge to transform assets, matching the needs of savers with the requirements of borrowers. This process is most clearly observed in the banking sector.

2. Key Elements of the Financial System

The financial system consists of three core components:

• Financial Assets and Liabilities: Products issued by deficit units and acquired by surplus units to invest savings. Examples: loans, shares, and banking products.
• Markets: Platforms where financial assets are traded. Examples: primary, secondary, monetary, and capital

Official Credit Institute (ICO) — Role & Funding

What is the ICO: The only remaining public bank is the Official Credit Institute (ICO), a public company.

How is it funded:

• Income from its assets.
• Contributions from the State or other public bodies, companies, or associations.
• Raising funds in domestic or foreign markets through the issuance and placement of certificates, notes, bonds, debentures, and any other securities that imply an admission of debt.

How it cannot be financed: The Treaty on European Union establishes that the ICO receives the same treatment as private credit institutions.

ICO Functions

• Contribute to mitigating the effects of severe economic crises, natural disasters, or similar situations, according to instructions from the

Key Participants in the Foreign Exchange Market

The foreign exchange market participants include companies, institutional investors, individuals, private banks, central banks, and brokers.

• Companies and Individuals: These represent the majority of market users. Companies utilize the market for imports, exports, and payments. Individuals typically resort to currency transactions for travel purposes.
• Private Banks: These institutions handle foreign exchange operations and obtain profits through arbitrage.
• Central Banks: A central bank intervenes in the foreign exchange market by buying or selling currencies to stabilize the exchange rate, acting on matters of monetary and exchange policy.
• Brokers: These are intermediaries who facilitate transactions

The Bank of Spain: Core Functions

From 1 January 1999, the functions of the Bank of Spain as the national central bank for the Eurozone were redefined. The law recognizes the protocols of the European Central Bank (ECB) and their execution by the Bank of Spain (BE).

The BE participates in and develops several basic functions conferred on the European System of Central Banks (ESCB):

• Define and implement monetary policy (to achieve price stability).
• Implement foreign exchange policy.
• Issue legal tender banknotes.
• Hold and manage reserves.
• Monitor the credit system.
• Promote the smooth operation and financial stability.
• Put coins into circulation.
• Advise the government.

Economic Cycles

The economy follows a path of expansion and growth, often not uniformly,...

Item 6: Market

Market: an element that is continuously present in our lives and is formed by the buyers and sellers of a good or service.

Types of Markets

There are several types:

Depending on the type of goods (traded)

• Factor markets: Markets to buy or sell factors of production. Example: working machinery.
• Market for goods and services: Buying or selling merchandise.

According to the number of buyers and sellers

• Perfect competition: Existence of many buyers and sellers and a homogeneous product. Ex: fruit, vegetables.
• Monopoly: A single seller facing many buyers. Ex: a local utility company.
• Oligopoly: Many buyers and few firms. Ex: gas stations, mobile operators.
• Monopolistic competition: Many buyers and sellers and a differentiated product by brand,

Fixed Asset Classification and Valuation

Fixed assets consist of all property and rights that remain within a company for more than one financial year.

Classes of Fixed Assets

• Intangible Assets: These include administrative concessions and industrial property applications.
• Equipment (Tangible Assets): This category covers land and natural resources, construction, installations, technical facilities, machinery, utensils, furniture, information processing equipment, transportation elements, and other material assets.
• Real Estate: This includes land and natural resources investments, as well as investments in construction.

Evaluation Criteria for Assets

Goods and rights classified as fixed assets are valued at their acquisition price. This price must...

The Core Components of the Marketing Mix

The marketing mix is the combination of policies concerning the four basic elements of marketing: product, price, promotion, and distribution.

Product Strategy

A product is anything that has value to a user or consumer because it satisfies one of their needs and can be commercialized.

Product Features

• Tangible: The set of physical characteristics that can be perceived by the senses.
• Intangible: A set of features that are not detectable by the senses.

The two basic product strategies involve selecting the brand and managing the product life cycle.

Types of Brands

• Single Brand: All of the company's products, however different, are marketed under the same brand. This is also known as an umbrella brand.
• Multi-brand:

Idea Generation: Market Insight

An idea can arise from personal knowledge of the existence of an interesting market opportunity.

Core Business Principles

These involve meeting needs and being innovative and different.

The Differentiating Factor (USP)

These are the characteristics that differentiate our products from others. They can be:

• Economic
• Practical
• Aesthetic
• Technical
• Psychological or Social

Defining the Business

Business involves facilitating the exchange between the company and prospective buyers of its products.

Commercial Management

This is the process of carrying out the business efficiently.

Total Marketing and the Marketing Mix (4 Ps)

The Marketing Mix is a combination that allows the company to control the four elements (Product, Price, Promotion,...