Notes, abstracts, papers, exams and problems of Economy

Users of Accounting Information

The use of accounting information is key for obtaining a systematic, quantifiable, objective, and economic view of a company. The relationships and transactions that a company maintains directly affect its operators and social users. Among these are:

• Management and Owners: Informed of the company's assets and all accounts that are growing.
• Investors: Need accounting information to assess the risks and returns of their investments.
• Workers and Unions: Need data to assess work conditions and negotiate wage agreements.
• Financial Institutions and Creditors: Assess risk using accounting information to determine the company's ability to repay loans and interest payments.
• Customers: Have an interest in the company's continuance

Consumer goods provide immediate and direct satisfaction. For example, a person needs food and drink. Means of production directly satisfy needs and are useful in producing consumer goods. For example, to produce consumer goods like clothing, you need means of production like wool and sewing machines.

Nondurable goods are used only once and consumed in that application, such as food. Durable goods can be used repeatedly. They wear down with use, such as clothes or a car. Capital goods are durable and used for production and consumption.

Raw Materials and Finished Goods

A finished product is suitable to meet needs, such as edible fruits. A raw material is used as the initial element of a process, such as wood, wool, or cotton. Semi-finished products... Continue reading "Understanding Economic Assets" »

Economic Aspects of Franco's Victory

The victory of Franco in the Civil War had very negative economic repercussions. The three years of military clashes broke up the economy. Agricultural and industrial production declined. Many ways and means of communication were destroyed. Gold reserves and foreign exchange were sapped, and buildings and manufacturing facilities were utilized.

The Axes of Autarky

One of Franco's objectives was to achieve economic self-sufficiency (autarky). The result was blocking economic growth and competitiveness and reducing the waste of the economic upturn that met in Europe after World War II. The incorporation of Spain into the rapid growth phase was substantially delayed. Autarky had two major areas of activity:

1. Regulation

Gross Domestic Product (GDP)

GDP represents the monetary value of all goods and services produced by a country in a given period of time.

Characteristics of GDP:

• Follows a monetary standard.
• Considers only declared activities.
• References the value of final goods.
• Measures the value of what occurred within the borders of a country.
• Refers to what occurred within a specific period of time.

GDP at Market Prices (GDPmp): C + I + G + (X-M)

GDP at Factor Cost (GDPfc): Value Added by Sector A (VAA) + Value Added by Sector B (VAB) + ...

Nominal GDP is obtained by multiplying the quantities of final goods and services by the prices they had during that year.

Real GDP is calculated like nominal GDP, but it is multiplied by the prices of the year used as a base... Continue reading "Understanding GDP, Inflation, Fiscal Policy, and Aggregate Demand" »

Functions of Commercial Banks

• Mediator between savers and borrowers.
• Creation of money: They can open deposit accounts for customers or allow the provision of checks exceeding the amount deposited.
• Safety: Operators can deposit their savings in the bank as legal money to protect it from loss and theft.

Balance of Commercial Banks

• Assets: Resources and rights
• Liabilities: Funding sources and debt

Assets

Cash Reserves

• Cash (legal tender) and Central Bank deposits: E = cc ¹, DV

Earning Assets

• Credits: Typical operations of the banks.
• Stock portfolio: Public funds, bonds, and stocks.

Real Assets

• Buildings, property, real estate, equipment, and facilities.

Liabilities

Customer Funds and Liabilities

• Demand deposits (Dv) of savings and term.
• Central Bank loans (PBC)

Direct Costs

These are costs that can be directly evaluated; that is, it is possible to calculate their economic value.

Controllable Costs

These are all derived from actions that the company undertakes to prevent possible defects.

Costs Arising

These are costs that occur due to faulty production.

Indirect or Hidden Costs

These are costs that are difficult to calculate, and in many cases, not even perceived, but they exist.

Client-Side Costs

These cover the cost of replacement or compensation for defective products or poor services rendered.

Cost of Customer Dissatisfaction

This refers to when a customer pays for a product or service expecting minimum requirements to be met, and when they are not, it creates dissatisfaction.

Cost of Loss of Reputation

The... Continue reading "Automotive Headlight Manufacturing: Cost Analysis" »

Marketing Definition

According to the 1985 AMA: "Marketing is the process of planning and execution of conception, communication, and distribution, as well as pricing, ideas, products, and services for exchanges that satisfy individual and organizational objectives."

Kotler: "Marketing is that human activity directed at satisfying needs, wants, and desires through exchange processes."

Differences Between Marketing and Sales

• Marketing considers consumer needs and develops products accordingly, while sales focuses on selling existing products.
• Marketing may not always be lucrative (e.g., social marketing), while sales aims to generate profit.
• Marketing includes post-sale activities, while selling primarily focuses on the initial transaction.
• In marketing,

Role of Distribution Channels

• Centralize basic marketing decisions: The type of wholesale has an important influence.
• Helps reduce costs: Distribution channels can reduce storage and transportation costs. Outsourcing these functions allows companies to focus on their core competencies.
• An asset to the company: A well-chosen distribution channel can be a very important asset.
• Intervenes in pricing: Distribution channels advise on the most suitable pricing strategy. The more intermediaries a product passes through, the longer and more expensive the channel becomes. However, a short channel provides the advantage of first-hand information.
• Provides market information: Distribution channels possess valuable information about the market, competition,

Circular Flow Mechanism

In any economy, there are many transactions and exchanges. The circular income flow expresses the relationships between simplified economic actors. We consider an economy where only two economic agents are considered:

• The domestic economy: They own the factors of production, which they provide to businesses, and earn an income with which to purchase goods and services.
• Businesses: They produce goods or services sold in the market, and with the income they get, they pay for the productive factors.

Companies provide families with goods and services that they demand. There are two types of flow:

• The real flow: This reflects the goods and services produced by businesses. The sum of the production of all companies is called the