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

Chapter 3: Project Preparation and Evaluation

Pre-Investment

This stage determines the amount to be invested, and the project will be evaluated by measuring its profitability.

• Project Profitability: Measures the profitability of the business, regardless of who undertakes it.
• Investor Profitability: Measures the return on equity for the investor if they carry out the project.

Project Classification

A) According to the Objective of the Study:

• Project profitability
• Investment
• Capacity to pay for the project

B) According to the Type of Investment:

• Creation of a new business
• Modernization project:
  • Internalization
  • Externalization
  • Replacement
  • Expansion
  • Abandonment

Social Assessment of Projects

Compares the benefits and costs that a particular investment may have on... Continue reading "Project Preparation and Evaluation: Key Stages" »

Wages: Wages are the remuneration for work performed. The demand for labor influences wage levels. The mechanism of job creation is driven by companies. The quantity of labor demanded depends on factors such as:

• The level of wages and the price of goods and services.
• The productivity of the worker relative to the wage level.
• The characteristics of the population.

Employment Policy

Employment policy encompasses a set of plans aimed at reducing unemployment within an economy. Before implementing such policies, it's crucial to understand the characteristics of the population.

Population Characteristics

Population characteristics can be categorized based on their degree of participation in the production process:

• Working-age population: Individuals aged

The Product Life Cycle: A Biological Parallel

The product life cycle draws a biological parallelism, suggesting that products, like living organisms, go through stages of birth, maturity, and death. Every product typically experiences four distinct phases:

• Introduction: This is the phase where the product enters the market.
• Growth: Consumers identify with and begin to consume the product, leading to increased sales.
• Maturity: Sales stabilize as the product reaches its peak market penetration.
• Decline: The demand for the company's manufactured product decreases, often as a consequence of strategies used in previous stages or market shifts.

Distribution: Connecting Products to Consumers

Marketing, particularly distribution, is the variable most closely... Continue reading "Mastering Product Life Cycle, Distribution, and Pricing Strategies" »

**Funding Sources**

Financial sources are categorized as follows:

According to Ownership of Resources

• **Own Financing:** Capital contributed by partners or owners, and reserves.
• **External Financing:** Resources that generate a debt or obligation.

According to the Length of Time

• **Long-Term:** Members' contributions, loans, and borrowings.
• **Short-Term:** Bank loans and other short-term loans.

According to the Origin of Funds

• **Internal Financing (Self-Financing):** Generated within the company through savings.
• **External Financing:** Funds sourced from outside the company.

**Shareholder Rights**

• Participate in the sharing of benefits in proportion to the number of shares held.
• Subscribe to shares in capital expansions on a preferential basis.
• Be informed

Provincial Budget Execution and Investments

Understand the mechanics of the current Provincial budgets and the nature of investments made from them. The execution of the budget spent to date has reached 67.12 percent, reflecting a strictly normal level, taking into account that many investments are spread across multiple items.

Regarding investments in 2009, budgeted roadworks currently underway are worth EUR 13 million. Nearly eight million has been contracted in the last quarter of this year, in addition to an 8.8 million contract awarded for conservation and maintenance. Given these figures, it is not understood where the information provided by Martin, stating that only two million had been invested, originated.

Historical Memory Grants Doubled

Rosalina... Continue reading "Spain Budget News: Provincial Spending, Historical Memory, Hiring Aid" »

International Trade

No country can provide everything its inhabitants want or need. To address these needs, countries engage in international trade.

Imports and Exports

Imports: A country buys goods and services that it either lacks or can obtain more cheaply from elsewhere.

Exports: To pay for imports, a country sells goods and services it has a surplus of or can produce more cheaply than other countries.

Trade Surplus and Deficit

Trade Surplus: A country earns more money from exports than it spends on imports.

Trade Deficit: A country spends more on imports than it earns from exports.

Interdependence

Interdependent Countries: Nations that engage in trade with each other.

LEDCs and MEDCs

LEDCs: Typically export cheap foodstuffs (e.g., tea, coffee) and... Continue reading "International Trade and Aid: A Global Perspective" »

Understanding Business Entities and Company Structures

Choosing the right legal form for your business is a crucial decision. This document outlines various types of business entities and company structures, detailing their characteristics, liabilities, and capital requirements.

Sole Proprietorship (Empresario Individual)

A Sole Proprietorship is a business entity where an individual operates in their own name and through their commercial, industrial, or professional enterprise.

Key Characteristics:

• Legal Age: The individual must be of legal age.
• Total Control: The proprietor has complete control over the enterprise.
• Unlimited Liability: The proprietor's personal assets are not separate from the business assets, meaning their liability is unlimited.

Net Working Capital and Stable Funding

Regarding Net Working Capital (NWC), the stable portion requires permanent funding and should, therefore, be sought from sources of a similar long-term nature. Conversely, if business activity presents seasonal or temporary instabilities, the variable portion of NWC should be financed by short-term sources.

Covering Business Needs with Capital

Needs must be covered with permanent equity or long-term debt, and temporary needs with short-term bank instruments such as credit policies and discount financing. True.

This statement highlights the principle of matching the maturity of assets with the maturity of liabilities. Permanent needs, such as fixed assets and the stable portion of working capital, should be... Continue reading "Mastering Business Finance: Capital, Debt, and Funding Strategies" »

Understanding Economic Measurement

The Expenditure Approach to GDP

The expenditure approach is a fundamental method for calculating a nation's Gross Domestic Product (GDP). It sums up all spending on final goods and services within an economy. The components include:

• Private Consumption Expenditure (C): Spending by all consumers on goods and services.
• Investment (I): Expenditure incurred by companies to acquire capital assets, such as machinery, equipment, and buildings.
• Public Expenditure (G): Spending by the public sector when it acquires goods and services.
• Exports (X): Spending that businesses and consumers abroad perform on domestically produced goods and services.
• Imports (M): Spending by domestic consumers and businesses on foreign-produced

State Intervention and the Financial System in the 19th Century

The Role of the State

There are two primary perspectives on the role of the state in the economy:

• The State Does Not Intervene: This approach was predominantly observed in Britain and, to a lesser extent, the United States. It was rooted in the classical schools of thought, whose proponents advocated for liberalism. They believed that state intervention should be confined to activities that were not attractive to the private sector but were beneficial to society, adhering to the doctrine of "Principles of Liberalism."
• The State Intervenes: State intervention can be motivated by a country's economic backwardness, the late unification of certain nations in the 19th century (such as Italy