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

Fundamentals of Markets and Exchange

Defining Business and Market

A business is a specialized unit that coordinates the production of goods and services.

A market is a place where buyers and sellers meet to facilitate the exchange of products and services.

Key Elements of a Market

We identify three important elements in a market:

1. Sellers: Normally businesses, who produce products or services in order to sell them in exchange for money. They usually sell them to final customers, but also to other businesses.
2. Buyers: Normally families, although companies can also buy from other companies. Buyers acquire goods and services with money in order to satisfy their needs.
3. Products and Services: Goods, both tangible and intangible, that are exchanged between

launch/introduce/roll out a product ≠ withdraw a product

(BRAND) stretching/extension  awareness/recognition image  loyalty

ADS endorse a brand target an audience sponsor an event launch a campaign run a campaign place an ad run an ad attract/appeal to... Continue reading "Essential Business English Vocabulary and Terminology" »

WTO Agreements and Core Functions

The WTO agreements cover goods, services, and intellectual property. They manage these areas under the principles of liberalization—with permitted exceptions—to achieve lower customs tariffs and to keep services markets open.

Key WTO Responsibilities

• Handling Trade Disputes: The WTO’s procedure for resolving trade quarrels under the Dispute Settlement Understanding is vital for enforcing rules and ensuring smooth trade flows.
• Monitoring and Support: Monitoring national trade policies while providing technical assistance and training for developing countries.
• Institutional Cooperation: Collaborating with international institutions such as the IMF and the World Bank.

International Trade Theories

Absolute Advantage

Chapter 9.1: Introduction to International Political Economy

Expanding membership—cultural criteria and institutional workability

• What makes a country “European”?
• Wealth gap: Luxembourg $102,000 vs. Moldova $1,900
• Comparison: Massachusetts $65,000 vs. Mississippi $31,800

The study of the interactions between states and markets in an increasingly globalized world.

What is Globalization?

The process of increasing integration of the world in terms of economics, politics, communications, social relations, and culture.

Increasingly seen as undermining traditional state sovereignty.

Mercantilism

• 15^th–18^th Century: European states dedicated to pursuit of economic wealth
• Encourage exports over imports
• Industrialization over agriculture
• Protect domestic

Types of Taxes

• Income Tax: A percentage of individual earnings filed with the federal government.

• Corporate Tax: A percentage of corporate profits taken as tax by the government to fund federal programs.

• Sales Tax: Taxes levied on certain goods and services.

• Property Tax: Based on the value of land and property assets.

• Tariff: Taxes on imported goods, imposed to strengthen domestic businesses.

• Estate Tax: A rate applied to the fair market value of a property at the time of death.

Understanding Tax Fraud

Tax fraud involves failing to pay the government (e.g., town council, provincial government) the taxes corresponding to income or benefits obtained during a specific period.

• Tax Evasion: Involves concealing income (either domestically or in other countries,

Core Business Terminology

Retrenchment: This occurs when a business cuts its workforce and closes factories; it is also referred to as downsizing.

Commission: A form of payment to an agent, often calculated on a percentage basis of sales made.

Regional trading bloc: An organization of countries that have formed economic alliances for mutual benefit.

Corporate Social Responsibility (CSR): A voluntary approach by businesses that recognizes they have an obligation to assess and take responsibility for the organization's effects on the environment and on social welfare.

Economies of scale: A decrease in the cost per unit produced as the total scale of the production facility increases.

Empowerment: A form of non-financial reward and a motivational technique... Continue reading "Essential Business Management and Growth Strategies" »

Foreign Investment Strategies

• Foreign Indirect Investment (Portfolio Investment): Specific assets and intermediate products transferred between two independent economic agents. In this instance, control over the resources is relinquished by the seller to the buyer, and only financial resources are transferred.
• Foreign Direct Investment (FDI): Investment made outside the home country of the investing company in which control over the resources transferred remains with the investor.

Corporate Integration Models

• Vertical Integration: When various stages of the production process are incorporated into one firm. This occurs because a corporation wants to ensure security of supply or reduce transaction costs. Example: BP may own oil wells in the Middle

Incoterms: Understanding Responsibility and Risk in International Trade

Exam Questions

GDP

GDP fails to measure changes in "the quantity of existing products that don't cause a change in price". Whenever there is inflation, the increase in nominal GDP will overstate growth in the economy

True

Unemployment

Assume the US unemployment rate is 4.9%. If 10,000 working age immigrants enter the country all looking for work and 9.000 find a job, what happens to the US unemployment rate?

Increases

Assume the US unemployment rate is 4.9%. If 10,000 working age immigrants enter the country all looking for work and 9.000 find a job, what happens to the US labor force participation rate?

Increases

A recent college graduate who is still looking for their first job would be considered as

Unemployed

The eligible population is: 200,000. Employed: