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

Orthodoxy

Under pressure from the IMF, Belaúnde was forced to reduce the budget, increase public utility rates, and devalue the national currency, the sol. Thus, the currency was worth less, and more had to be spent to import a product. The IMF measures resulted in a severe recession (contraction of demand), which impacted the citizens' finances. The poorer citizen consumes less and, as they consume less, pays less tax. In 1984, the Belaúnde government fell into arrears with the payment of its external debt.

Heterodox Program

The payment of external debt was limited to 10% of Peruvian exports. A new currency, the inti, was introduced, replacing the devalued sol. Basic prices, wages, and the exchange rate on the dollar were frozen. By avoiding

Spanish Economic Development: The Franco Era (1939-1975)

Post-War Stagnation and Recovery (1939-1959)

The long post-war period (1939-1959) brought great devastation and a high economic price to Spain. The country experienced stagnation and economic crisis for almost 20 years. The standard of living was significantly lower; it only returned to the 1935 level between 1953 and 1954. The economic hardship was not strictly due to war-related causes but also stemmed from Francoist policies that favored this depression.

Autarky Period (1939-1950)

This phase was characterized by two main policies:

• The desire for economic isolation from the outside world, limiting imports and exports.
• An emphasis on exploiting Spain's own resources.

To achieve this, the INI... Continue reading "Spain's Economy Under Franco: Autarky to Expansion (1939-1975)" »

Understanding the Balance of Payments

The Balance of Payments (BOP) is a systematic record of all economic exchanges that take place between residents of a country and the rest of the world during a specific period. Its operations are grouped, depending on their nature, into three main sections, often referred to as sub-balances:

Current Account

This account reflects the movements of goods and services between a country and the rest of the world. It comprises:

• Balance of Trade: Records the value of all goods that residents of a country buy from and sell to other countries (exports and imports of merchandise).
• Balance of Services: Records the value of all services provided to residents of other countries and received from them (e.g., tourism, transport,

Monetary Policy Instruments and Central Bank Functions

Central banks in a modern economy have several key functions:

• Issuance of Legal Money: The creation of banknotes.
• State Banker: Providing treasury services and managing government debt.
• Bank of Banks: Custody of liquid reserves and lending to financial institutions.

The Bank of Spain, as a delegation of the ECB, lends to commercial banks to implement monetary policy and address liquidity issues.

• Supervision of the financial system, including intervention in poorly managed institutions.
• Management of foreign exchange reserves and gold.
• Central risk information and balances, assessing client loan history.

The European System of Central Banks (ESCB)

With the creation of the Economic and Monetary Union... Continue reading "Monetary Policy: Central Banks, ECB, and Financial System Operations" »

Spain's Economic Transformation

There was a new orientation of the economy as a result of the failure of autarky, advocated by the new technocratic governments. This economy was expressed in the Stabilization Plan, characterized by:

• Decrease of state intervention
• Momentum for foreign trade
• Promotion of foreign investment
• Convertibility of the peseta
• Elevation of interest rates and wage freezing

This was followed by Development Plans, which aimed to boost economic growth through structural measures and Development Poles.

Drivers of Economic Growth

Economic development occurred thanks to contributions from outside, which provided technology and capital investment, served as a market for production, absorbed surplus manpower, provided transfers from emigrants,... Continue reading "Spain's Economic & Social Transformation" »

Reserve System

Market: The Intersection of Supply and Demand

• Job Market:

  This comprises job offers from organizations in a specific location and time. Increased organizational presence leads to higher employment rates.

• Human Resources Market:

  This encompasses individuals employed in a specific location and time, categorized by specialization (e.g., lawyers, engineers, skilled workers).

Therefore, the Human Resources Market reflects the Labor Market; when one is abundant, the other is in demand, and vice versa.

Recruitment: A Proactive Approach

Recruitment involves actively inviting individuals from various organizations to participate in the selection process. This ensures a wider pool of applicants, leading to better choices.

External Recruitment:

The foreign trade balance. The current imbalances in international trade

China leads the last 20 years growing at an average rate of 10 percent annually and has hardly been affected by the great recession plaguing the world since 2007. It is therefore the main character and now we need the argument, which is none other than economic globalization. China has become the economy grows faster and is helping to further the transformation of economic structures with the opening of goods and capital markets and globalization. China saves 52 percent of the income it generates, while in the U.S. and saving for many years has been 0 percent. The success of China, is to become the world's factory, where export-oriented model. China's success places significant... Continue reading "The Impact of China's Trade Surplus on Global Economy" »

Industrial Production Growth Analysis

Developments in Industry

Stress Analysis of Industrial Production Growth from 3 Aspects:

• Respect to the Overall Economy
• Regarding Environmental Factors
• Domestic Demand Considerations

Since 1985, the contribution of the industry to economic growth has significantly decreased, reflected in its reduced participation in the Gross Value Added (GVA) at current prices concerning employment (see Table 2, p. 168). From this perspective, the industry no longer plays the central role in Spain's economic development that it did in the 1960s, when its presence in GDP increased significantly, consolidating the industrialization process in Spain.

However, this does not mean that the Spanish economy is experiencing deindustrialization,... Continue reading "Industrial Production Growth Analysis: Spain's Economic Shift" »

Investment Definition

To perform activities, a company needs a set of elements or factors of production. Thanks to the savings of different economic agents, companies can obtain the resources they need to carry out their investments and thus become eligible for benefits.

According to Pierre Massé: "Investment is the act whereby there is a change of instant gratification and a certain resignation to that for the hope that is acquired, of which the asset acquired is the support." Investment enables business growth.

Selecting Funding Sources

Several factors influence the selection of funding sources:

• The Type of Investment

  For financing current assets, funding sources may be short-term. However, if the asset is expected to remain with the company for

New Figures Show First Contraction in 16 Years

New figures released in Britain confirm that the economy has weakened sharply. Gross domestic product (GDP) fell by 0.5% in the third quarter of the year. Here's our Economics Correspondent, Andrew Walker:

The news comes in the same week that the country's Prime Minister and Central Bank Governor both said that Britain is facing a recession. The new figures, which could be revised, are consistent with that assessment, although they don't confirm it.

Recessions in developed economies are often defined as two consecutive quarters of declining GDP, and this was the first. Most economists do, however, think there will be further falls in output.

This was the first contraction in the British economy for... Continue reading "UK Economy Shrinks: Recession Looms as GDP Falls" »