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

Understanding India's Capital Markets

A capital market is a financial market where long-term funds are raised and invested. It deals with instruments such as shares, debentures, bonds, and other long-term securities. It provides a platform for investors to invest their savings and for businesses and governments to raise capital for productive purposes.

Primary and Secondary Markets

The capital market consists of two main segments:

• The primary market, where new securities are issued (e.g., IPOs).
• The secondary market, where existing securities are traded among investors.

Key Functions of the Capital Market

The capital market performs several essential functions crucial for economic development:

1. Mobilization of Savings: It channels individual and institutional

Steady State in the Solow Growth Model

In the Solow growth model, the steady state refers to a long-run equilibrium where key economic variables (such as capital per worker, output per worker, and consumption per worker) do not change over time. This occurs when the economy reaches a point where the capital stock per worker, k, is constant because investment (savings) equals depreciation, and no additional net investment is happening.

The IS Relation and Goods Market Equilibrium

The IS relation (or IS curve) represents the relationship between the interest rate (r) and the level of output (Y) that ensures equilibrium in the goods market. It reflects the combinations of interest rates and output levels at which the total demand for goods equals... Continue reading "Macroeconomic Concepts: IS-LM, Solow Model, Natural Rates" »

This document outlines several fundamental business strategy frameworks crucial for analyzing market dynamics, competitive landscapes, and internal capabilities.

PESTEL Analysis: External Environmental Factors

The PESTEL analysis identifies key environmental variables that may influence a business, either positively or negatively. Choosing critical dimensions is essential for effective analysis.

• Political: Government agencies, pressure groups, lobbies, etc.
• Economic: Income, prices, inflation, debt, credit, etc.
• Sociocultural: Population, birth rate, lifestyle, consumption habits, etc.
• Technological: Innovation, technological changes.
• Ecological: Raw materials, sustainability, recycling, etc.
• Legal: Regulations related to competition, consumers, and

Key Business Acronyms

• CCP: Chinese Communist Party
• OCA: Online Choice Architecture
• EBIT: Earnings Before Interest and Taxes
• CRS: Corporate Social Responsibility
• GPS: Global Positioning System
• COGS: Cost of Goods Sold

Scott Galloway on the Modern Business Landscape

Professor Scott Galloway highlights oil as the most important commodity. However, in the current era, he argues that social media platforms like TikTok are the real deal, although he believes TikTok should be banned due to its links with the CCP, which he considers a tool of espionage.

Innovation Strategies of Supermajors

Supermajors, or large oil and gas companies, are employing innovative strategies such as:

• Emotional Resonance: Engaging users through comments and attractive content.
• Offloading

Business Functions and Logistics

• Core Functions: Administration, Human Resources (HR), Technology, Procurement
• Logistics & Operations: Inbound Logistics, Operations, Sales, Service, Outbound Logistics

Key Information Systems

Enterprise Resource Planning (ERP)

• Integrated system covering: Sales, Production, Finance, HR
• Characteristics: Complex, Costly

Supply Chain Management (SCM)

• Manages: Supply, Production, Distribution
• Covers: Inbound Logistics, Manufacturing, Outbound Logistics
• Focus: Inventory Cost reduction
• Related Concepts: Key Performance Indicators (KPI) for efficiency, Just-In-Time (JIT)

Customer Relationship Management (CRM)

• Types: Operational, Analytical, Collaborative
• Process: Capture customer data, Analysis, Change business processes
• Goals:

India's banking system is a well-structured and regulated system, primarily overseen by the Reserve Bank of India (RBI). This document details its structure and evolution.

🏦 1. Regulatory Body: Reserve Bank of India (RBI)

• Established: 1935 (under the RBI Act, 1934)
• Role:
  • Regulates the issue and supply of currency.
  • Acts as the banker to the government and commercial banks.
  • Formulates and implements monetary policy.
  • Supervises and regulates financial institutions and markets.

🏛️ 2. Structure of the Banking System in India

A. Scheduled Banks

Listed in the Second Schedule of the RBI Act, 1934, they maintain a minimum reserve with the RBI.

i. Commercial Banks

These banks operate for profit and constitute the largest group in the Indian banking system.... Continue reading "India's Banking System: Structure, Evolution, and Future" »

Monopoly vs. Perfect Competition

The main differences between a monopolist and a competitive firm are that in the case of a monopoly, there is greater scope for establishing the price, although this control is not absolute. The monopoly firm has more freedom to adjust both the price and the quantity produced in their attempt to maximize profits.

Social Impact and Price Discrimination

From society's point of view, a monopoly involves less desirable effects than those derived from economic competition. In general, a monopoly results in lower production of goods and services than would result under competitive conditions, often with higher prices. Another common practice of a monopoly is price discrimination, which involves charging different prices... Continue reading "Monopoly vs. Perfect Competition: Key Market Differences" »

Business Entity Fundamentals

• Entities:
  • Natural person (1 owner)
  • Moral person (+2 owners)
• Source of Capital:
  • Private (individuals)
  • Public (state)
  • Mixed (individuals and state)
  • Domestic (Mexicans/national)
  • Foreign
• Act Developed:
  • Trade
  • Manufacturer
  • Service
• Countries Operate:
  • National
  • Multinational
• Purpose:
  • For-profit
  • Non-profit

Financial Reporting Standards (IFRS)

All entities keep accounting records as measured following Financial Reporting Standards (IFRS).

Accounting Definition

Accounting: Methodical and systematic record of the daily operations of an economic entity.

IFRS Ethics Principles

• Integrity: Honest
• Objectivity: No conflict of interests
• Competition: Update knowledge
• Confidentiality
• Professionalism: Comply with laws

Accounting Information Systems

System: Set of elements... Continue reading "Key Business and Accounting Concepts" »

Global Economic Governance and Trade

Globalization (Globalización): The world is more connected for trade, capital, and people crossing borders. Big groups like the OMC (WTO), FMI (IMF), and Banco Mundial (World Bank) help countries trade and provide loans when needed.

International Institutions

• WTO / OMC (Organización Mundial del Comercio): Controls global trade rules.
• IMF / FMI (Fondo Monetario Internacional): Lends money to countries in financial trouble.
• World Bank / BM (Banco Mundial): Provides loans for development projects.

International Trade Balances

• Trade Deficit (Déficit comercial): Occurs when a country imports more than it exports.
• Trade Surplus (Superávit comercial): Occurs when a country exports more than it imports.
• Balance of Payments

Macroeconomic Variables and National Accounts Identities

Key Definitions of Income, Savings, and Consumption

• W: Labor Income Before Taxes
• NOS: Net Operating Surplus (Profits Before Taxes)
• Rg: Government Revenue (Income obtained from public properties)
• Cd: Private Consumption (Household consumption spending)
• Yd: Disposable Income (The sum of all household income in a country, after tax)
• Cg: Current Public Consumption (Government expenditures on current goods and services)
• Ig: Public Investment

Savings and Surplus Components

• Sg: Public Savings
  • Formula: Sg = Rg + Td + Ti - Zg - H - Cg
• Sf: Corporate Savings (Reserves/Undistributed profits)
• GOS: Gross Operating Surplus (Profit of firms)
  • Formula: GOS = Sales - Intermediate Consumption - Salaries
• NOS: Net Operating