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

Inflation and Deflation

Inflation is an increase in prices, reducing purchasing power. It occurs when the price of goods and services rises faster than salaries. Consequently, demand falls, leading to reduced production and a decrease in GDP.

Deflation is when prices fall more than wages. This leads to increased demand, increased production, and a rise in GDP.

World Trade Dynamics

World Trade Without Restrictions

• Higher prices
• Fewer consumer choices

World Trade With Restrictions

• Protection of national defense and citizen health
• Protection against dumping. Dumping occurs when manufacturers export a product to another country at a price either below the price charged in its home market or below its cost of production.
• Potentially lower prices for consumers

launch/introduce/roll out a product ≠ withdraw a product

Types of Taxes

• Income Tax: A percentage of individual earnings filed with the federal government.

• Corporate Tax: A percentage of corporate profits taken as tax by the government to fund federal programs.

• Sales Tax: Taxes levied on certain goods and services.

• Property Tax: Based on the value of land and property assets.

• Tariff: Taxes on imported goods, imposed to strengthen domestic businesses.

• Estate Tax: A rate applied to the fair market value of a property at the time of death.

Understanding Tax Fraud

Tax fraud involves failing to pay the government (e.g., town council, provincial government) the taxes corresponding to income or benefits obtained during a specific period.

• Tax Evasion: Involves concealing income (either domestically or in other countries,

Incoterms: Understanding Responsibility and Risk in International Trade

Exam Questions

GDP

GDP fails to measure changes in "the quantity of existing products that don't cause a change in price". Whenever there is inflation, the increase in nominal GDP will overstate growth in the economy

True

Unemployment

Assume the US unemployment rate is 4.9%. If 10,000 working age immigrants enter the country all looking for work and 9.000 find a job, what happens to the US unemployment rate?

Increases

Assume the US unemployment rate is 4.9%. If 10,000 working age immigrants enter the country all looking for work and 9.000 find a job, what happens to the US labor force participation rate?

Increases

A recent college graduate who is still looking for their first job would be considered as

Unemployed

The eligible population is: 200,000. Employed:

Open ended schemes: In this scheme there is an uninterrupted entry and exit into the funds. The open ended scheme has no maturity period and they are not listed on the stock exchanges. The open ended fund provides liquidity to the investors since repurchase is available.

Closed ended funds: The closed ended funds have a fixed maturity period. The first time investments are made when the closed ended scheme is kept open for a limited period. Once closed, the units are listed on a stock exchange. Investors can buy and sell their units only through stock exchanges.

Other classification

Growth scheme: Aims to provide capital appreciation over medium to long term. Generally, these funds invest their money in equities.

Income scheme: Aims to provide... Continue reading "Types of Mutual Funds: Open Ended vs Closed Ended Funds" »

This text tries to make known the changes that capitalism has had in the last thirty years, second the opinion of several authors. It makes a comparison between different texts of the 1960s, where  family capitalism is criticized, and the texts of the 1990s, where there are already large planned organizations, hierarchies.

Objective Management in 1960

In relation to Objective Management in 1960, two major problems arise:

• Strong dissatisfaction on the part of the “Cadres”
• Management problems that are linked to the giant size of companies.

Cadres, it is the meaning of the value they have for a company. On the one hand, we have the role of “technical expert” and on the other the “relay management” the transmission of orders from above... Continue reading "Changes in Capitalism: 1960s vs 1990s" »

Installment buying:a commodity over a period of time. Thebuyer gains the use of the commodity immediately and then pays for it in periodic payments called installments.

Bull market:a market in which share prices are rising, encouraging buying.

Speculation:With only loose stock market regulations in place before the Great Depression, investors were able speculate wildly, buying stocks on margin, needing only 10% of the price of a stock to be able to complete the purchase.

Black tuesday:October 29, 1929. On this date, share prices on the New York Stock Exchange completely collapsed, becoming a pivotal factor in the emergence of the Great Depression.

FDR:Franklin Delano Roosevelt, commonly known as FDR, was an American statesman and political leader

Auditing

Checking and evaluating financial records.

Cash Flow

The total amount of money being transferred into and out of a business, especially as affecting liquidity.

Balance Sheet

A statement of the assets, liabilities, and capital of a business or other organization.

Bookkeepers

Individuals who record transactions in purchase ledgers and sales ledgers.

Income

The money a company receives from supplying goods or services.

Expenditure

The money that a company spends.

Fee

A charge for a service performed by a bank.

Premiums

Payments for an insurance policy.

Conglomerate

A multi-industry company. It is generally formed when one company expands by acquiring other firms.

Insurance

A method of protecting a person or firm against financial loss resulting from damage... Continue reading "A Glossary of Financial Terms for Beginners" »

Chapter 4: The Federal Reserve's Responsibilities and Operations

Three Main Responsibilities of the Federal Reserve

1. Achieve full employment
2. Maintain price stability
3. Maximize economic growth

The Federal Reserve conducts the national monetary policy to achieve these goals.

Open Market Operations

Responsibilities:

• Control the money supply (MS)
• Set targets for MS growth and interest rate levels
• Influence the MS by buying or selling government securities (debt securities, Treasuries)

The Trading Desk

What they do: Purchase or sale of Treasuries

Impact on the economy:

• Money Supply: Purchasing government securities increases the money supply, while selling them decreases it.
• Interest Rates: An increased money supply puts downward pressure on interest rates, while