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" »

19.The clientele effect:implies that favoring high dividend policies and the factor favouring loan dividend policies cancell each other out.Individual sin high tax brackets: zero or low dividend payouts.individuals in low tax brackets: low to medium dividend payout. Tx free institutions: medium dividend payout. corportaions: high pay out of dividends.20.Synergy in a merger and acquisition process:synergy:the additional value that rises from the merger of 2 companies.The value of Vab=Va+Vb.sources:REVENUE EVIROMENT, COSTS REDUCTIONS(ec scale), tax gains, reduced capital requirements.21.Intrinsic and time value of an option:time value: the premium that an investor is willing to ay over its aument intrinsic value. The most time that remains until... Continue reading "Essential Financial Concepts: Dividends, M&A, and Derivatives" »

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" »

Financial and Market Fundamentals

• Balance sheet: A statement that shows the financial position of a company on a specified date.
• Profit margins: The percentage of profits remaining after all costs, interest, and taxes have been subtracted.
• Market trend: An observed tendency of financial markets to move in a particular direction over time.
• Bull market: An upward movement of the market.
• Bear market: A downward movement of the market.
• Consumer confidence: The economic indicator reflecting that if the economy is successful, consumers will spend more money.
• Buoyant: Successful, and likely to remain successful.
• To benchmark: To provide a standard or to compare with others.

Operations and Supply Chain

• Distribution channel: The chain of intermediaries through

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" »

Market Segmentation and Business Aims

2a) Target Market: The market research segment that a particular product is aimed at.

b) Mission Statement: A statement of a business's aims, phrased in a way to motivate and attract employees.

The Role of Adventure for All

• Security: It creates more security for consumers by stating that safety is an important reason for having fun.
• Inclusivity: It emphasizes that everyone can try it by stating that affordability is important. This attracts many people because an adventure that everyone can do engages people to participate.

Predatory Pricing Strategy

Advantage: In the long term, the company that wins the predatory price war causes the other company to lose and exit the business. The winning company can then raise... Continue reading "Business Growth Strategies and Market Analysis" »

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

Core Concepts of Marketing Promotion

Promotion: communicating information between seller and potential buyer or others in the channel to influence attitudes and behavior.

Primary Methods of Selling

• Personal selling: direct spoken communication between sellers and potential customers, usually in person but sometimes over the telephone.
• Mass selling: communicating with large numbers of potential customers at the same time.
• Advertising: any paid form of non-personal presentation of ideas, goods, or services by an identified sponsor.
• Publicity: any unpaid form of non-personal presentation of ideas, goods, or services.
• Sales promotion: those promotion activities—other than advertising, publicity, and personal selling—that stimulate interest, trial,