Notes, abstracts, papers, exams and problems of Economy

Functions of a Financial Market

• Connecting Buyers and Sellers: Facilitates the meeting of buyers and sellers of financial assets without needing a physical location.
• Issuance and Exchange of Assets: Supports the creation (primary markets) and subsequent trading (secondary markets) of financial assets.
• Price Determination: Establishes the prices of financial assets through various pricing mechanisms, such as supply and demand or predetermined conditions.
• Public Information: Disseminates information about asset prices, trading mechanisms, and pricing systems.
• Providing Liquidity: Ensures that assets can be easily converted into cash without significant loss of value.
• Reducing Transaction Costs: Lowers the costs related to finding counterparts and determining

Sole Proprietorship

A sole proprietorship is a business structure where an individual owns and operates the business. The owner contributes the capital, manages operations, and is solely responsible for the business's outcomes. They may work alone or employ others. This structure is the easiest to form and simplest to organize. The sole proprietor can borrow funds or utilize others' money for business purposes.

Advantages of Sole Proprietorship

Easy to Start

Forming a sole proprietorship is easier than partnerships or corporations. There are no legal formalities like agreements, memorandums of association, or articles of association.

Easy to Dissolve

Dissolving a sole proprietorship is simple, as the owner doesn't need permission from shareholders... Continue reading "Sole Proprietorship: Advantages, Disadvantages, and Characteristics" »

Switzerland's poverty and inequality policies strive for an equitable society, focusing on tailored aid like social assistance and housing support. Despite a low official poverty rate, certain groups, like single-parent households and immigrants, face vulnerability due to high living costs and limited job prospects. To address these challenges, a multifaceted approach is crucial, encompassing better education access, economic growth, and reinforced social safety nets. Additionally, policymakers must confront systemic barriers and invest in affordable housing, healthcare, and education to foster inclusive development.

Social Safety Nets and Support Programs

Switzerland helps people who need support through different programs and guarantees. These... Continue reading "Poverty and Inequality Policies in Switzerland" »

Study of Socioeconomic Problems and Needs: D: An analysis of socioeconomic needs is conducted to identify the issues that public funds should address.R: It is crucial to ensure that funds are allocated to areas that truly need them, aligning program objectives with the real needs of society.Issuance of Call for Proposals Terms and Conditions:D: Objectives, beneficiaries, eligible concepts, and deadlines of the call are defined.R: This stage ensures transparency and clarity in eligibility criteria and program objectives, facilitating the participation of companies and other interested parties.Publication of the Call:D: The call is made public so that interested parties can submit their applications.R: It is fundamental to ensure that all stakeholders... Continue reading "Public Funding Program Lifecycle: From Needs Analysis to Impact Assessment" »

Income from Other Sources: Key Questions and Answers

Q1. What is the name of the fifth head of income?

Ans: Income from other sources.

Q2. What are the essential conditions for chargeability of income under the head 'Income from Other Sources'?

Ans: The following conditions must be satisfied:

• (i) There must be an income that is not exempted from tax.
• (ii) The income must not be chargeable under any of the first four heads (i.e., other than the head 'Income from Other Sources').

Q3. Write two examples of income that are chargeable under the head 'Income from Other Sources'.

Ans:

• (i) Winning from lotteries
• (ii) Winning from crossword puzzles

Q4. Under which head is the salary of MP/MLA charged?

Ans: Income from other sources.

Q5. Define the term 'security'

Hedging with S&P 500 Index Futures

SIF hedging: NF = V_F(antiguo) = F_o x Z. NF (Number of contracts) = V_p (portfolio value) / (V_F x B_p) (Beta). With this hedge, risk is removed. If the index goes up, the profit in the portfolio will be offset by losses in SIFs contracts and vice versa.

Example: S&P 500 falls 5%:

• In the portfolio: R_p = B_p x (-5%) = -10% of a portfolio of $10M, resulting in $9M (Final Value).
• In the SIFS contracts: S_i = 980 (S&P 500 value given) x 0.95 (100% - 5%) = 931. F_i = 931 x (1 + 0.04 x 5/12 (next month timeframe)) = 946.52. V_F = NF x (F_i - F_o) x Z (250).
• Gain on futures: V_F(New) / Equity portfolio value.
• Outcome stock portfolio: 2 x (-5%) = -10%.
• Final Value portfolio: $10M - $1M + V_F(New).

Margin Payments

Margin payments... Continue reading "Hedging and Speculation with Futures and Options" »

Defining "Person"

A "person" can refer to various legal entities:

1. Individual: A natural human being.
2. Hindu Undivided Family (HUF): A family unit with common ancestors, treated as a single entity for tax purposes (India).
3. Company: A corporate entity registered under the Companies Act or similar law.
4. Firm: Partnership firms and limited liability partnerships (LLPs).
5. Association of Persons (AOP) or Body of Individuals (BOI): A group with a common purpose, with or without a formal partnership.
6. Local Authority: Municipal corporations, panchayats, and other local governance bodies.
7. Artificial Juridical Person: Entities like trusts, universities, or temples, recognized by law.

Defining "Assessee"

An "assessee" is a person liable to pay taxes:

1. Ordinary Assessee:

What is a Firm?

Let us now try to understand the meaning of a 'firm'. A firm is a focal point of the production system of any country. A firm produces goods with the help of its own resources. Sometimes these resources are borrowed from outside, and they are paid remuneration (price) for using them, for example, land, labor, capital, etc. A firm is an organizational unit, while a plant is a 'technical unit'. The objective of a firm in organizing such factors of production is to maximize profit. In other words, profit is the main objective of a firm. Any decision of a firm is taken in accordance with this objective.

Two Views of a Firm in Business Economics

In business economics, a firm is considered in two ways:

1. From the theoretical point of view.

Characteristics of Entrepreneurship

• Economic and Dynamic Activity
• Related to Innovation
• Profit Potential
• It is a Continuous Process
• Risk Bearing
• Entrepreneurship is a Philosophy
• Discipline

Need and Importance

• Development of Managerial Capabilities
• Creation of Organization
• Improve Standards of Living
• Means of Economic Development

Types of Entrepreneurs

• Innovative Entrepreneur
• Imitating Entrepreneur
• Fabian Entrepreneur
• Drone Entrepreneur

Qualities of an Entrepreneur

• Innovativity
• Extremely Energetic
• Self-Confidence
• Risk Taker
• Future-Oriented
• Responsible
• Decision Taker
• Collective Analysis of Facts
• Flexibility

Functions of Entrepreneurship

• Risk Bearing
• Organizational
• Innovative
• Managerial
• Decision Making

Role of Entrepreneur in Small Business

• Wealth Creation
• Create Jobs
• Balanced Regional

Theme II: The Development of the Global Economy

5. Japan's Post-War Economic Growth

I. Role of Government

• Growth-driven policies and focused leadership
  • The Liberal Democratic Party (LDP) mostly ruled after 1955.
  • A cohesive unity of bureaucrats and politicians made up competent policymakers focused on achieving economic development and self-reliance.
  • Tight policy coordination was known as the "Iron Triangle."
  • The Yoshida Doctrine was implemented in the early 1950s.
  • Ikeda's Income Doubling Plan was introduced in the early 1960s.
  • Sato's Three Non-Nuclear Principles were established in the early 1970s.
• Heavy government involvement in the free market
  • The Ministry of International Trade and Industry (MITI) decided, charted, and planned Japan's industrial and