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

Consequences of Eliminating Export Tax on Cashew Nuts

By eliminating the export tax on raw cashew nuts, it was believed that removing trade barriers would alleviate poverty by increasing the price farmers would receive. Several industrialists who purchased factories opposed the elimination of the export taxes on cashew nuts. The advice failed because the World Bank did not completely analyze the consequences of lifting the export tax barrier. They applied economic theory without considering if the theory would be pertinent in light of the development history of Mozambique. Some consequences were that workers and farmers lost their jobs.

Capital According to De Soto

1. Describe the definition of capital according to De Soto. Why in the non-Western

Core Commercial Service Logistics Parameters

From a logistics perspective, commercial services fundamentally rely on three key parameters:

• Merchandise availability for immediate delivery to the client.
• Quick merchandise delivery.
• Reliability of the promised delivery date to the customer.

Warehouse Definition and Challenges

A warehouse is a "planned space for the efficient location and handling of materials and merchandise." Warehouses aim to solve two primary problems:

• Correct layout design.
• Efficient handling of operational processes (product inputs and outputs).

Warehouse Operational Processes

A warehouse can be considered a production center where a series of processes are carried out:

• Receiving merchandise.
• Product adaptation (packing, labeling, etc.

International Monetary Fund (IMF)

The IMF is an organization created to control the fixed exchange rate established in Bretton Woods.

The IMF's primary purpose is to ensure the stability of the international monetary system—the system of exchange rates and international payments that enables countries (and their citizens) to transact with each other. The Fund's mandate was updated in 2012 to include all macroeconomic and financial sector issues that bear on global... Continue reading "International Financial Institutions: IMF, OECD, WTO" »

Chapter 2

Paragraph Structure:

• Topic sentence: states the topic and introduces the main idea

• Body sentences: support the topic sentence

• Concluding sentence: restates the main idea and ends the paragraph

Steps to develop:

Narrow the topic: make it more specific. You can use brainstorming, questioning, or freewriting.

Topic sentence: it introduces the topic to the paragraph, it states the paragraph’s controlling idea, it is the most general sentence in the paragraph, and it is followed by other sentences that provide supporting facts and examples.

Controlling idea: writer’s opinion or attitude

Supporting ideas: facts and examples that provide the reader with interesting information about the subject matter

You can organize your ideas in:

Time order:... Continue reading "Effective Paragraph Structure and Revision Techniques" »

Multiple Choice Questions

1. The optimal use of a variable input occurs when the marginal revenue product equals marginal factor cost.

2. In which range of market share is a firm typically considered dominant? 30% to 85%

3. Which of the following is usually not a source of sustainable competitive advantage? A firm may have a large marketing budget.

4. Before launching a new type of product, what should a company do? Sensitivity analysis

5. The type of economic indicator used to predict future economic activity is a leading indicator.

6. Which of the following is not part of the four-step forecasting process? Developing internal controls

7. In which model is the new forecast equal to the old forecast plus some proportion of the last observed forecast error? First-order

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2. Rent Out Your Car

Peer-to-peer car sharing platforms like Turo allow you to rent out your car when you're not using it. You can earn a significant income, depending on the type of car you have and how well you market it.

3. Host on Airbnb

Airbnb connects travelers with hosts who offer accommodations. You can earn extra income by renting out a room or your entire house.

4. Sell Products Online

E-commerce platforms like Amazon and eBay make it easy to sell products online. You can start with little overhead and focus on minimizing your exposure... Continue reading "10 Easy Ways to Make Extra Money on the Side" »

Understanding Economic Activities

3S: A group of economic activities that consist of offering services.

• Public services (offered by the state): Healthcare, Education
• Distribution services (change the position of something): Transport, Telecommunications, Trade
• Business services (company to company): Repairs, Installations, Professional services
• Customer services (company to people): Repairs, Installations, Personal services, Trade, Travels, Tourism

Quaternary Sector: A group of economic activities classified within the 3S. Commonly, services require a lot of training and formation. Includes mostly scientific and technological research, such as Biomedicine.

TransNet: A combination of nodes and pathways.

• Nodes (N): Points of departure and arrival for

Leases

• Operating lease: a shorter-term lease under which the lessor is responsible for insurance, taxes, and upkeep, cancelable by lessee on short notice.
• Financial lease: a longer-term, fully amortized lease which the lessee is responsible for maintenance, taxes, and insurance. Not cancelable without penalty.
• Leveraged lease: a tax-oriented lease in which the lessor borrows a substantial portion of the purchase price of the leased asset on a nonrecourse basis.
• Sale and leaseback: occurs when a company sells an asset it owns to another party and simultaneously leases it back.
• Capital lease: transfer ownership to lessee by the end of the term, lesses purchase the asset at a price below fair market value when lease expires, >75% economic life,

The Liquidity Preference Theory of Interest

The Liquidity Preference Theory, presented by J.M. Keynes in 1936, is a highly regarded theory. According to Keynes, the rate of interest is a purely monetary phenomenon. It represents the reward for relinquishing liquidity for a specific period.

Thus, similar to the price of a commodity, the rate of interest is determined by the demand for and the supply of money. Therefore, it is necessary to introduce the concepts of demand for money and supply of money.

The supply of money refers to the stock of money in circulation and is a fixed quantity at a particular point in time. It is the sum of currency (notes and coins) and commercial bank deposits. It remains fixed in the short run because it is determined... Continue reading "Liquidity Preference Theory: Keynes' Interest Rate Model" »

CH:3 Term: Balance Sheet: The balance sheet is a snapshot of the firm’s assets and liabilities at a given point in time. Assets are usually listed in descending order of liquidity, or the ability to convert to cash. While the assets depict what is owned, liabilities and equity represent what is owed or who provided the funding for the assets. Balance Sheet Identity: {Assets = Liabilities + Stockholders’ Equity}

Net Working Capital: The difference between current assets and current liabilities. It is positive when the cash that will be received over the next 12 months exceeds the cash that will be paid out. Usually, it is positive in a healthy firm.

Market Value vs. Book Value: The balance sheet provides the book value of the assets, liabilities,... Continue reading "Understanding Balance Sheets and Income Statements in Finance" »