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

Key Macroeconomic Indicators and Concepts

• GDP (Gross Domestic Product): The volume of production within a country’s borders; it includes everything produced in a country regardless of the origin of the factor of production.
• GNP (Gross National Product): The value of all final goods and services produced by a country’s factors of production and sold in the market in any given period.
• Consumption: The portion of GNP purchased by private households.
• Investment: The portion of production consumed by private companies to produce their own output.
• Government Purchases: All the consumption and investment activities of local and national authorities.
• Unemployment: The ratio between people actively seeking employment and the active population.
• Productivity:

Good Supplier Selection

To value and compare:

• Qualities
• Prices
• Discounts
• Terms
• Cost of Transportation
• Packaging
• Payment
• Customer Service
• Long-term Relationship Potential

Supplier Comparison Table

Prepare a comparative table showing all offers:

• Prices
• Quality
• Payment Terms
• Delivery
• Discounts
• Etc.

Importance of Transportation

Transportation is important because it involves the transfer of goods. Consider freight costs (noli), freight services, and insurance, especially for expensive products, to ensure their safety and potentially save costs.

Managing Long Delivery Times

Regarding delivery: If payment is late, the seller typically has the right to charge interest. Payment is normally due fifteen days after delivery of the product, allowing the buyer time to verify... Continue reading "Supplier Selection and Evaluation" »

Political Landscape

The two political groups that dominated the assembly were:

• Girondins: Represented the interests of the bourgeoisie.
• Jacobins: Represented the laborer people and the sans-culottes.

The Roaring Twenties (1920-1929)

The year 1929 marked the end of an era of extraordinary economic prosperity in the United States known as the Roaring Twenties. This expansion resulted from increased demand during World War I and the post-war recovery.

Burgeoning Economic Growth

The expansion of the American economy was driven by a change in production dominated by technical innovation and changes in work organization, characteristic of the Second Industrial Revolution.

Consumer Revolution

A significant shift occurred in the systems of demand and supply.... Continue reading "The Roaring Twenties and the Great Depression: A Historical Analysis" »

Tax is to raise revenue (cover a range of government expenditure) (e.g. Build school, hospital, improve road)

To discourage certain activities that will cause damage to people’s health or pollution. (e.g. cigarette, cars, fuel)

To discourage the import of goods, import tax is referred to as tariff

To redistribute income from the rich to poor

Direct tax: paid directly to the government from your wages

Indirect tax: tax that is added on goods and services. Consumers pay tax by paying more for the goods or services.

Progressive tax: rich people pay more than poor people

Regressive tax: poor people pay more than rich people. This happens when the government imposes a tax at a set rate.

Proportional tax: Everyone has to pay the same percentage of income.... Continue reading "Understanding Taxation and Trade" »

Step 1: Clarifying What We Are Talking About

Globalization

Globalization is increasing economic integration among countries due to trade, migrations, and capital flows.

Trade

• Imports and exports of goods and services
• Imports and exports of licenses, patents, copyrights -> licensing, franchising market entry modes

Migrations

• Movement of people -> remittances, working visas

Capital Flows

• Inward and outward Foreign Direct Investment (FDI) (long term, owning and controlling assets) -> mergers, acquisitions, equity alliances
• Inward and outward Foreign Portfolio Investment (FPI) (short-term speculative investment)

Step 2: Identify Data Sources

Identify data sources where to find data from these variables (OECD, EUROSTAT).

Step 3: Gather the Data

Step

Accounting 1:

Car Expenses

Owning a car brings freedom, but it also comes with responsibilities. The costs involved with buying a car are more than just the purchase price. A young person needs to know how much they can afford to pay:

• For one-off expenses, such as: purchase price, stamp duty & transfer of registration fee (where applicable).
• For annual and ongoing expenses, including: registration, compulsory car insurance, optional car insurance, loan repayments (if applicable), fuel, parking, car maintenance, & car servicing (for periods not covered by warranty if applicable).

Car Insurance

Car insurance can cover the cost of your car if you damage it, it is stolen, or if anyone is injured. If there is an accident involving your car, you... Continue reading "Car Expenses: A Comprehensive Guide to Costs and Financing" »

Management Buyouts Explained

Q: Management Buyouts are a form of buyouts. Explain this term.

Management buyouts (MBOs) are acquisitions where the company's existing management team purchases the company. While legally similar to other acquisitions, MBOs differ because the buyers are also the company's managers. This often means a limited due diligence process, as the buyers already possess in-depth knowledge of the company. Sellers are also likely to provide minimal warranties, assuming the management team is more familiar with the company's state than they are.

Stock Issuance and Dividend Calculation

Q: Company XYZ wants to issue more Common Stock of Face Value Rs 12. Next Year the Dividend is expected to be Rs. 3 per share assuming a Dividend

Corporate External Growth Strategies

Economic Conditions

Labor shortages

Lack of market growth

Vertical Growth

Achieved by taking over a function previously provided by a supplier or distributor.

Horizontal Integration

The degree to which a firm operates in multiple geographic locations at the same point in an industry’s value chain.

Vertical Integration

The degree to which a firm operates vertically in multiple locations on an industry’s value chain, from extracting raw materials to manufacturing to retailing.

Forward Integration

Assuming a function previously provided by a distributor.

Backward Integration

Assuming a function previously provided by a supplier.

Horizontal Growth

Expansion of operations into other geographic locations and/or increasing... Continue reading "Corporate Growth & Stability Strategies" »

Essential Definitions in Economics

Economics

The study of how individuals and societies choose to use the scarce resources that nature and previous generations have provided.

Scarcity

All economic questions arise because we are unable to satisfy all our wants.

Marginalism

The process of analyzing the additional or incremental costs or benefits arising from a choice or decision.

Sunk Costs

Costs that cannot be avoided, regardless of what is done in the future, because they have already been incurred.

Efficient Market

A market in which profit opportunities are eliminated almost instantaneously.

Opportunity Cost

The process of choosing a good or service over another. The item that you don't pick is the opportunity cost.

Specialization

When an individual or... Continue reading "Essential Economic Concepts: Definitions and Core Terms" »