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

Comprar por Internet: Ventajas

No need to queue to buy.

Access to stores and products in remote locations.

It is possible to offer and find a lot of options.

Online stores are available every day at all hours.

Reduction of personnel expenses.

No need to handle cash.

Desventajas

Lack of communication and personal relationship.

Impossibility to try the product before buying it.

It is necessary to have a secure Internet connection.

It is essential to have a device from which to connect to the Internet.

Fear of fraudulent payments, scams, and theft of personal information (hackers).

Difficulty or even inability to detect scams and scammers.

Absolute dependence on the Internet.

Discomfort for returns.

Conclusion

The advantages of buying online outweigh the disadvantages,... Continue reading "Advantages and Disadvantages of Online Shopping" »

Functions of Money

1. Store of value

2. Medium of exchange

3. Unit of account

Changes in banking laws

Transactions demand to money is closely related to money functioning as medium of exchange

Primary purpose of the legal reserve ratio: provide a means by which the monetary authorities can influence the lending ability of commercial banks.

Money is destroyed when loans are paid off

Securities held as assets by the Federal Reserve Bank consist mainly of Treasury bills and Treasury bonds

What happens when FRB buys bonds from public in open market and amount held by the public doesn't change: Commercial bank reserves will increase

When central bank borrows from FRB, the commercial bank's lending ability is increased.

The simple multiplier 1/mps

Reserve ratio... Continue reading "Functions of Money and Monetary Policy: A Comprehensive Overview" »

Concept of Business

Business refers to those economic activities involving the purchase, production, and/or sale of goods and services with a motive of earning profit by satisfying human needs in society.

Characteristics of Business

• An Economic Activity: Business is considered an economic activity as it is undertaken with the objective of earning money.
• Production or Procurement of Goods and Services: Business includes all the activities concerned with the production or procurement of goods and services for sales. Services include transportation, banking, insurance, etc.
• Sale or Exchange of Goods and Services: There should be a sale or exchange of goods and services between the seller and the buyer.
• Dealing in Goods and Services on a Regular Basis:

Introduction

Capitalism, when faced with a crisis, tends to restructure itself. New technologies, organizational forms, modes of exploitation, types of jobs, and markets emerge to create new ways of accumulating capital.

The Rise of the Cognitive Economy

The dominant narrative in advanced capitalist countries has been one of change, particularly focusing on the rise of technology: automation, the sharing economy, and the internet of things. Theorists argue that these changes have led to a cognitive, informational, or knowledge economy.

Data as the New Raw Material

A key argument of this chapter is that in the twenty-first century, advanced capitalism has come to be centered upon extracting and using a particular kind of raw material: data. Data... Continue reading "Data Capitalism: The Extraction and Exploitation of Raw Data in the 21st Century" »

Understanding Economies of Scale

Economies of scale refer to the cost advantages that enterprises obtain due to their scale of operation, with cost per unit of output generally decreasing as the scale increases, because fixed costs are spread out over more units of output.

Types of Economies of Scale

Economies of scale can be broadly categorized into external and internal types, each offering distinct benefits to businesses.

External Economies of Scale: Skilled Labour Pools

When an industry is concentrated in a particular area, it often leads to a significant build-up of skilled labour. This means that businesses can readily find workers with the specific skills and work experience required by that industry. As a result:

• Training costs are lower

The Savings-Investment Relationship

The financial system helps efficiently direct the flow of savings and investments within the economy. Here, financial institutions like banks play a major role. They allow depositors to invest money in various deposits, such as Fixed Deposits (FDs) and Recurring Deposits (RDs), by offering attractive rates of interest. These savings are then channeled by the banks to provide credit to different business entities involved in production and distribution.

Fostering the Growth of Capital Markets

Business entities require capital for funding business activities and production. Businesses require two kinds of capital:

• Working capital
• Fixed capital

Therefore, various business entities use the financial system to raise... Continue reading "The Financial System's Role in Economic Growth" »

Income Statement: Financial Performance

Measures a company's financial performance over a specific period of time.

• Revenue: First amount on right (credit)
• Expense: Second amount on left (debit)
• Revenues - Expenses = Net Income
• If net income is negative, it is called a Net Loss.
• Net income is allocated to either Dividends or Retained Earnings.

Retained Earnings: Company Profits

Represents the portion of net income that the firm has kept (as opposed to paying out as dividends).

• Ending Retained Earnings (ERE) = Beginning Retained Earnings (BRE) + Net Income (NI) - Dividends
• In a Statement of Stockholders' Equity, it would include common stock: ERE = BRE + Common Stock (Owner Contribution) + NI - Dividends

Balance Sheet: Financial Position Snapshot

Reports... Continue reading "Financial Statements & Core Accounting Principles" »

Classical Economics: Flexible Prices and Wages

The statement that prices and wages are flexible is central to the self-adjustment perspective of classical economists. This flexibility extends beyond product markets to factor markets, particularly labor.

If some workers temporarily face unemployment, they would compete for jobs by offering their services at lower wages. As wage rates declined, producers would find it more profitable to hire additional workers. Ultimately, classical economists believed that flexible wages would ensure that everyone who desired a job would be employed, leading to full employment in the long run.

Say's Law: Production and Demand

Description of Say's Law

Say's Law posits that the key to economic growth is not increasing... Continue reading "Economic Principles: Classical Self-Adjustment, Say's Law, and Business Cycles" »

Classical Management Theory

Frederick Taylor's Scientific Management

Key Principles of Taylorism:

• Scientific Study of Work: Tasks should be scientifically studied to identify the most efficient methods for performing them. This involves breaking down complex tasks into smaller, simpler steps and analyzing each step.
• Division of Labor: Dividing work between management and workers. Managers are responsible for the planning and scientific analysis of work processes, while workers are tasked with executing the standardized methods.
• Standardization of Tools and Techniques: Taylor emphasized the use of standardized tools and techniques to minimize variability and optimize efficiency.
• Time and Motion Studies: Taylor conducted time and motion studies to

Understanding Poverty in America

Defining Poverty and Its Scope

Political conflict over poverty in America begins with disagreement over its nature and extent, and then it proceeds to disputes over its causes and remedies. While many anti-poverty programs are largely regarded as federal programs, many allow states to set their own eligibility criteria and benefit levels, and are a blend of federal and state government funds. The official poverty rate in the U.S.A. has ranged between 11% and 15% in recent years. This official definition of poverty includes all those Americans whose annual cash income falls below that which is required to maintain a decent standard of living. The official poverty rate varies considerably among the states; poverty... Continue reading "Poverty, Public Health, and Healthcare in the United States" »