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

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" »

National Healthcare Privatization Debate

In Spain, healthcare service is public. In my opinion, this service should be public worldwide so that the sick or the poor will not face difficulties in receiving treatment. Public healthcare offers significant advantages:

• It guarantees healthcare for all citizens, including those with limited financial resources.
• Pharmaceutical services are free for pensioners and their beneficiaries.
• Public health services often possess more human and technical resources, leading to superior medical care quality compared to private services.

Conversely, private healthcare often presents notable drawbacks:

• It generally does not cover chronic diseases, even if they appear after the insurance policy is contracted.
• Most private

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

Why Currency Exchange Rates Change

If our currency is demanded (for example, because our products are demanded), the price of our currency would increase unless we increase the money supply. Conversely, if, for example, people hold assets in our currency but want to sell them, this would lead to depreciation.

Interest rate is the price of our money, because we sell bonds that yield a certain benefit. If we increase the interest rate, we make the bond more attractive. People would invest money in these bonds, and less money would circulate in the economy.

This internal use of interest rates to control inflation also has external consequences. High interest rates make bonds more attractive to foreign investors who would want to buy Euros (or the... Continue reading "Factors Affecting Currency Exchange Rates" »

Money Demand and Its Determinants

Money demand depends on the price level and the volume of transactions, which is defined as the number of goods and services transacted using money in one year.

Money demand can be represented as: P × T, where T = volume of transactions and P = average price level.

When the money market is in equilibrium, Md = Ms (Money Demand = Money Supply).

Formula: P = (V / T) × M

Assumptions:

1. This theory applies to short-run changes.
2. There is full employment in the economy.
3. The velocity of money and the volume of transactions remain constant.
4. The amount of barter trade remains constant.
5. M, V, and T change independently.

Changes in Velocity of Money (VOM):

• VOM increases: prices decrease = Deflation
• VOM decreases: prices increase =

Stakeholders in Business

Owners and Stockholders

• Have a monetary or nonmonetary interest in an organization or entity.
• Look for high profit, dividend, and long-term growth, as well as a positive corporate image.
• Example: Mr. XYZ is an owner of company ABC and expects a financial return.

Suppliers

• Companies build a number of small, loyal relationships with suppliers and associates.
• This enables each business to develop shared goals, visions, and strategies.
• Trade buyers and sellers can effectively collaborate to deliver the best value to end customers, which is beneficial to each side.
• Example: Carrefour Market is a distributor and supplier for Nestle products. Lulu aims for satisfactory transactions and revenue from purchases.

Employees

• Expect fair working

Social Needs:

• Economic aid to elderly people who aren't able to work.
• Enough food and clothes after losing a husband/wife who was the breadwinner.
• Treatment of illnesses.
• Financial support due to maternity or paternity.
• Financial support due to lack of employment.
• Home.
• Education.

Millennium Development Goals (MDGs):

1. Eradicate extreme poverty and hunger.
2. Achieve universal primary education.
3. Promote gender equality and empower women.
4. Reduce child mortality.
5. Improve maternal health.
6. Combat HIV/AIDS, malaria, and other diseases.
7. Ensure environmental sustainability.
8. Global partnership for development.