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

Central Banks and Shadow Banking

Competencies of Central Banks

• Monetary Policy (open market operations)
• Exchange Policy
• Lender of Last Resort
  • Bank of Banks
  • Bank of the State (In the US but not in Europe)
• Supervision of the Financial System

Banks create credit, money, and thus purchasing power. The ability to create credit and purchasing power, for good or ill purposes, is not unique to banks.

Shadow banking activities can create credit and money equivalents outside the normal banking sector. Central banks have not been able to counter the unsustainable shadow banking boom and have lost the capacity to control the quantity of money.

History of the Spanish Financial System

The modern history of Spanish banking begins in 1856. The Parliament approved two... Continue reading "Central Banks, Shadow Banking, and Spanish Financial History" »

Perfect Competition Properties

• P=MR
• Many Producers
• Homogeneous Product
• Many Buyers
• Price Taker
• Complete Knowledge of Input and Producer Prices
• Easy Entry and Exit

Monopoly Properties

• Heterogeneous Product
• One Producer
• Many Buyers
• Difficult Entry
• Producers Decide Price

Monopolistic Properties

• Many Buyers & Producers
• Slightly Differentiated Products
• Good Substitutes
• Easy Entry and Exit
• Producers Decide Prices

Oligopoly Properties

• Small Number of Firms
• Homogenous or Heterogeneous Product
• Price Decided by Firms
• Non-Price Competition

Optimum Output Conditions

TP= TR-TC, TP Slope = Derivative TP/ Derivative Q, if = 0 Profit is Maximum, MR=MC

1. MR=MC
2. Rising MC
3. P=Minimum AC
4. Zero Economic Profit

Slope MR is Horizontal, Per Unit Profit = P –AC, Total Profit = (P-AC)Q

Profit Situation=... Continue reading "Understanding Market Structures and Optimum Output Conditions" »

Business Model Canvas Essentials

The Business Model Canvas is a strategic management tool for documenting, developing, and designing new or existing business models. It comprises nine key building blocks:

• Customer Segments: The specific groups of people or organizations an enterprise aims to reach and serve.
• Value Propositions: The bundle of products and services that create value for a specific Customer Segment.
• Channels: How a company communicates with and reaches its Customer Segments to deliver a Value Proposition.
• Customer Relationships: The types of relationships a company establishes with specific Customer Segments.
• Revenue Streams: The cash a company generates from each Customer Segment.
• Key Resources: The assets required to offer and deliver

Special Pricing Strategies

1. For a New Product

Different stages in a product’s life cycle involve different goals, which require different pricing strategies.

A. Market-Skimming Price

Setting a high price for a new product to skim maximum revenues layer by layer from segments willing to pay the high price; the company makes fewer but more profitable sales. Example: Apple introduces new products with high prices, and then, when the new model is introduced, the older model decreases in price.

Conditions:

• Good quality and image
• Enough buyers
• Profitable → revenues can’t be offset by the costs of producing on a small scale
• Competitors can’t enter easily

B. Market Penetration Price

Setting a low price for a new product in order to attract a large number... Continue reading "Effective Pricing Strategies for Businesses" »

Definitions and Concepts

• Freight forwarders are licensed specialists in traffic operations.
• An Export Management Company is an independent marketing intermediary.
• A duty that represents a certain percentage of the value is an ad valorem duty.
• A nontariff barrier (NTB) includes all of the following except: ad valorem duty.
• A nontariff barrier (NTB) is a hidden trade barrier. TRUE

Economic Factors and Trade Issues

Currency Impact

• A strong U.S. dollar translates into less affordable prices in export markets.
• If the dollar, the yen, or the euro becomes seriously valued, it affects production by shifting production among different sites.

Trade Barriers and Subsidies

• Agricultural subsidies are particularly controversial because of their impact on countries

Traka Company Profile and Global Operations

Founding and Corporate Structure

Traka was founded in XX by YY, and its head office is located in X. It manufactures X and operates factories in [List of Factory Locations]. It also maintains branches in [List of Branch Locations].

Traka employs XX staff worldwide, and its annual turnover exceeds XX.

Organizational Structure: Key Departments

The company is divided into the following departments:

• Production Department: Deals with the production of goods.
• Sales Department: Responsible for product sales.
• Public Relations Department: In charge of communication with the press.
• Human Resources Department (HR): Responsible for recruiting new employees.
• Quality Control Department (QC): Responsible for checking the

UNIT 8 TRADE AND MANAGEMENT

Partnership: A Case Study of Diamond

Introduction

A partnership is a business arrangement where two or more companies share profits and liabilities. It can offer both advantages and disadvantages.

Advantages of Partnership

Pros

• New Perspectives and Knowledge: Partnerships can bring in new ideas and expertise, helping companies take their products to the next level.
• Easier Market Entry: Partnerships can provide credibility and local knowledge, making it easier to establish a business in new countries.
• Increased Capital: Partnerships can provide access to more capital for potential investments.

Disadvantages of Partnership

Cons

• Shared Control: Partnerships require sharing control, which can be challenging.
• Disclosure of Secrets: Partnerships can lead to

The aging of the Canadian population will strongly influence our economy. Social policies need to be re-evaluated and insurance coverage needs to be properly addressed. Mortality rates are trending upwards for all age groups.

Sandy is a financial planner. She uses statistics to illustrate the importance of life insurance for her clients. The total number of deaths per year among the Canadian population is decreasing.

Victoria and Rafael are both in their late fifties. Victoria has a part-time retail job and Rafael is currently employed as a carpenter and expects to get full CPP benefits when he retires.

Tyler and Suzie follow their financial planner's advice and implement some risk control strategies. Which of the following strategies does not