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

Formalizing Production Process Accounting

Production Process Analysis

Production is any activity that causes the transformation of resources as a result of a process. We differentiate between external transactions that identify changes to resources originating in the external world, and internal transactions, which are phenomena causing the transformation of resources as a result of the process. This is the company's economic activity without external exchanges. That is, the company carries out financial operations and transactions externally, while production operations are performed internally.

A production process is defined as any alteration, using a particular technique, of inputs (or means of production factors) into outputs (products).

Elements

After the First World War, most of the belligerent countries had suffered serious economic losses. The United States was the only exception, consolidating its position as a great world power.

The return to the pre-war economy presented many difficulties. These included:

• Dependence of European governments on the U.S. economy
• Increasing protectionism
• Rising inflation caused by an increased money supply during the war
• Rising unemployment
• A tendency towards overproduction in the economic system

The Roaring Twenties and the 1929 Crash

In the 1920s, America best reflected confidence in the future because it was the only country experiencing significant economic expansion. For this reason, much of the population took out loans and speculated on the New York... Continue reading "The Great Depression: Causes and Consequences" »

Domestic Growth Strategies

Domestic growth involves productive investments within the enterprise to increase productive capacity, also referred to as asset growth. This is achieved in several ways:

Major Domestic Strategies:

1. Market Penetration: Increasing sales by improving product quality, advertising, promotion, and price reductions.
2. Market Development: Introducing the company's current products into new markets.
3. Product Development: Remaining in the current market but developing new products related or complementary to existing ones.

Diversification Strategies

Diversification involves adding new products and new markets, expanding the company's portfolio of businesses. Key types include:

1. Horizontal Diversification: Adding new complementary or substitute

Regional Integration Processes

Regional integration takes place between states, and its objective is the elimination of barriers and obstacles to trade and relations between them.

Causes of Regional Integration

• Economic improvement for all parties
• Avoiding conflicts
• Fostering international influence

Effects of Regional Integration

• Trade creation and diversion
• Achievement of economies of scale (declining average costs by increasing production volume)
• Increased competition, beneficial for consumers
• Increased consumption and growth
• Stimulating investment, improving business expectations, leading to industrial growth

Location Factors

Industrial Location Factors

• Availability and price of industrial land
• Access to raw materials and other supplies
• Availability of

Economic Variables and Their Impact

Macroeconomic analysis often begins with the work of John Maynard Keynes, a prominent economist of the 20th century. Keynes identified three fundamental questions to minimize the negative impact of economic fluctuations:

• How to mitigate lower production and employment and reduce unemployment?
• What causes widespread price increases, and how can they be controlled?
• How can a country increase its rate of economic growth?

Economies experience alternating expansive and contractive phases, known as economic cycles. Economic policy aims to achieve long-term prosperity by focusing on production, pricing, and capacity.

Key indicators include:

• Gross Domestic Product (GDP): Measures production.
• Consumer Price Index (CPI): Indicates

Spain's Economy: Autarky and Intervention (1939-1959)

During the first decade, the priority was to rebuild the country, which was demographically and economically devastated. However, isolation and non-participation in the Marshall Plan made recovery difficult. Hunger forced rationing. To cope, Spain opted for a model of autarky and state intervention:

• Agencies were established to control prices, wages, and trade. Agriculture was controlled, factories were converted to producing basic goods, and the INI was created in 1941 to promote industrialization. Public companies emerged in strategic sectors, such as ENDESA, SEAT, and IBERIA, constantly receiving state aid, which generated huge public spending. The INI covered the deficiencies of the industrial

The Washington Consensus

Principles of the Washington Consensus

• Fiscal discipline
• Reordering of public spending
• Tax reform
• Interest rate liberalization
• Competitive exchange rate
• International trade liberalization
• Liberalization of direct foreign investment
• Privatization
• Deregulation
• Property rights

WTO Scope

Factors governed by the WTO:

• Intellectual property
• Regulation of business and capital
• Benefits
• FTAs
• Economic integration
• Systems for business services, health, and education

Globalization: Advantages and Critics

Advantages of Globalization

1. Reduced global costs
2. Improved product quality and programs
3. Greater customer choice
4. More effective competitive offerings
5. Poverty reduction

Critics of Globalization

1. Benefits primarily the elite
2. Focuses on growth over equitable development
3. Seeks

Remuneration and Social Security in Spain

Assessing In-Kind Compensation

Housing:

• 10% of the property's rateable value.
• 5% over the revised rateable value (effective from January 1, 1994).
• 5% over 50% of the wealth tax value if no rateable value exists.

Vehicle:

• Delivery: Purchase cost, including taxes.
• Use: 20% of cost and charges, or if not owned, the market value of a new equivalent vehicle.

Other In-Kind Payments:

• Loans with sub-legal interest rates: The difference between the actual and legal interest.
• Meals, lodging, travel, and tourism: Employer's cost, including taxes.
• Insurance premiums and fees: Employer's cost, including taxes.
• Worker's study costs: Employer's cost, including taxes.
• Pension plan contributions and liabilities: Full amount.
• Other:

Capital Investment Defined

Capital Investment refers to the financial operations, accurate determination, and actual capitalization of a business or investment, or the placement thereof. This concept is supposed to have a current or future value. Time plays an important role in financial matters because it determines the possibility that a sum of money today can be placed at interest until maturity, thus gaining an income.

Understanding Present Value & Net Present Value

Transaction discount, calculated using simple and compound interest, allows us to clearly observe the definitions of the following key financial concepts:

Present or Current Value

Present or Current Value is the capital invested in a particular financial transaction. In a discount... Continue reading "Essential Financial Terms: Capital, Value, and Simple Interest Explained" »