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

Banking Financial Intermediaries in Spain

Banks, thrifts, and credit unions constitute the Spanish banking system. These entities are financial intermediaries. The primary differences between them lie in their legal structure:

• Banks: Private companies aiming to generate profits for their owners.
• Savings Banks: Non-profit entities allocating profits to charitable and social causes.
• Credit Unions: Members are depositors who benefit from their financial services.

Regarding services, the typical activities of these banking intermediaries are very similar: deposit-taking and lending.

Market Failures

1. Cycles: The market is criticized for failing to ensure stable economic growth.
2. Externalities: Many economic activities generate external effects on society

The Role of the Company

The company is the basic economic unit in the face of production and is responsible for producing and publicly holding most goods and services.

The Employer's Evolving Role

The traditional employer is the person providing the capital and, at the same time, performing the functions of management. In companies, the entrepreneur-manager assumes the risk, and many times, is the founder.

As large companies emerge, there is a separation between the classical functions of the employer. On one side is the figure of the investor, who assumes the risks linked to the promotion and innovation by providing capital. On the other, it strengthens the role of the professional director, specializing in management and business administration.... Continue reading "Understanding Business Production and Efficiency" »

Types of Business Concentration

Based on Production Phases

Horizontal Merger

Occurs when companies within the same sector or performing the same processing or manufacturing stage combine.

Vertical Concentration

Involves the grouping of companies engaged in different phases of the production process, increasing industry supply through complementary products.

Conglomerate Merger

Characterized by multi-sectoral diversification.

Cartel

A formal agreement between firms to reduce or eliminate market competition, often controlling production and distribution.

Trust

The union of different businesses under central management to control product sales and marketing.

Holding Company

Controls other companies' activities through ownership of their shares.

Characteristics

Information Technology and Business Competitiveness

Reducing Transaction Costs and Brokerage

Inefficient markets require many intermediaries for transport, storage, collection, security, monitoring, and reporting. Computing and connectivity significantly improve market functions by facilitating:

• The instantaneous circulation of information on prices and product characteristics.
• The creation of more facilities to raise supply and demand.
• Inventory management and procurement.
• Rapid and safe transactions, among other things.

Electronic Commerce

Electronic commerce is a special instrument for the computerization of markets, with considerable growth potential and business opportunities across various industries.

Market Intelligence

Access to external market... Continue reading "IT Impact on Business: Lower Costs, Market Intelligence & Growth" »

Background of the Economic and Fiscal Regime of the Canary Islands (REF)

• 1507: First Royal Decree
• 1852: Port Franks
• 1972: Under a franchise and not the application of the Customs Revenue
• 1991: Adaptation to the EU Framework
• 1994: Current Economic and Fiscal Regime of the Canary Islands Act
• 2006: Renewal of the REF

What is Sought by the REF?

• Promoting the economic development of the Canary Islands
• Addressing the costs of remoteness:
  • Shortage of land and natural resources
  • Additional costs of supply and production
  • Difficulties in achieving economies of scale
  • Accommodation on the peninsula
  • Island market tightness

What is Intended by the Renewal of the REF?

• Improving the operation of the system
• Correcting inefficiencies
• Adapting to new regional aid guidelines for

International Trade: Core Justifications

The fundamental justification for international trade is to obtain goods and services not readily available or efficiently produced in the domestic country.

Factors Driving International Trade

• Production Costs: These depend on a country's endowment of factors of production (e.g., labor, capital, natural resources) and the technology utilized, significantly influencing prices.
• Demand: International trade is promoted by the diverse needs of a population. It is challenging for any single country to produce everything necessary to meet all its domestic demands.

Understanding Protectionism

Protectionism refers to a set of government actions aimed at restricting the entry of foreign products into a country, primarily... Continue reading "International Economics: Trade, Payments, and Forex" »

Types of Bank Deposits

Checking Account: A deposit account that allows for frequent transactions, typically used by individuals and businesses.

Savings Account: A deposit account designed for saving money, offering immediate availability of funds.

Term Deposits: Deposits held for a fixed term with a predetermined interest rate. The interest rate is typically higher than that of checking or savings accounts. Early withdrawal may be possible, but often without interest.

Functions of Money

Medium of Exchange: Used to buy goods and services.

Unit of Account: Provides a standard measure of value for all goods and services.

Store of Value: A way to store wealth, although its value can be eroded by inflation.

Demand for Money

People demand money for transactions... Continue reading "Banking and Finance: Deposits, Money, and the Spanish Financial System" »

Operational Accounting Fundamentals

Accounts: Information on each central patrimonial element. The account name and code should be placed on the left, with the debit (debe) on the left and the credit (haber) on the right. The account balance is the difference between the sum of amounts in the debit and credit columns.

Two types of accounts exist:

• Balance Sheet Accounts (Heritage Accounts): These record changes occurring in the elements that make up the company's balance sheet and show its financial situation at a given time (e.g., transport assets, stocks).
• Income Statement Accounts (Management Accounts): These record revenues collected and expenses generated as a result of the company's operations (e.g., purchases, wages, rentals, sales).

Company

Monopoly, Oligopoly, Cartels, Trusts, and Holdings

• Monopoly: A single company has complete control of a sector.
• Oligopoly: Stocks in each sector are controlled by a few large companies.
• Cartel: An agreement between companies to divide the market and artificially raise or maintain prices.
• Trust: A permanent merger of companies.
• Vertical Integration: A firm controls the entire production process.
• Dumping: Selling at a price below production costs temporarily to eliminate competition.
• Holding: Companies are controlled by the same bank.

New Production Systems

Taylorism: Scientific management of work based on the ideas of Frederick Taylor.

• Division of Labor: Each worker is assigned specific tasks in the production process.
• Tasks are timed to establish sanctions