Notes, abstracts, papers, exams and problems of Economy

Market Failures:
The fact that each person acts in their own self-interest has negative consequences, such as social inequality and the dominance of certain companies. These negative effects are called market failures. A market failure is a negative consequence of market function that leads to inefficient resource allocation.
In short, the main market failures are:

• Instability of economic cycles
• Existence of public goods
• Externalities
• Imperfect competition
• Unequal distribution of income

Instability of Economic Cycles:
Economic cycles are fluctuations between expansion and recession phases of economic activity.
Cyclical instability is the most important market failure because it directly affects the quantity and quality of jobs in a country. During a... Continue reading "Market Failures and the Spanish Welfare State: A Macroeconomic Perspective" »

Keynesian Economics

Keynes' famous proposal is based on the idea that insufficient demand causes unemployment. This innovative concept posits a balance between revenues and expenditures. It discusses the notion of production potential as something that depends on labor, capital, and technology. Production potential is obtained whenever inputs are utilized normally, with their changing production rates. This does not lead to short seasons in production methods and other production. Therefore, aggregate demand is the variable that causes inflation or unemployment. Due to negative thoughts, Keynes proposed that inequalities would have to be corrected with certain fiscal or tax policies.

The Great Crisis in History: The Crisis of 1929

The first decade... Continue reading "Keynesian Economics, the 1929 Crisis, and the Oil Crisis" »

Key Economic Concepts

Bid

Bid: A phenomenon correlated to the application and considered as the quantity (Q) of goods being offered for sale at a given price (X) per unit of time (D).

Taxes

Taxes: A mandatory financial contribution in kind (K) or a fixed amount that the state requires from citizens (X) as a tax credit.

Market

Market: A place where buyers and sellers make exchanges of products and services (D).

Monopoly

Monopoly: A situation where a single seller has control of a product (S) and a substitute (K) does not have total dominance in the price.

Examples of monopolies in Mexico:

• Pemex
• Telmex

Credit

Credit: Comes from the Latin word credere, which means to trust and have confidence, liability, or solvency.

Four functions of credit:

1. Applies capital
2. Aids

What is the Economy?

The economy involves factors like the price level, employment and unemployment, and the growth of foreign trade production nationally. Economic development is linked to the concept of quality of life, which gained prominence in the 80s, 90s, and 2000s. It emphasizes theories that explain the factors determining cultural, material, and spiritual progress, as well as overall well-being (income level).

Positive vs. Normative Economics

Positive economics: seeks to explain how the economic and social reality works. Normative economics: describes how reality should ideally be.

The Concept of Balance

The concept of balance: refers to the state where interacting forces are balanced, leading to a desirable solution from a societal perspective.... Continue reading "Core Economic Principles: Production, Markets, and Government Role" »

Functioning of the Economy Overall

The set of macroeconomic objectives can be summarized in one: to achieve a growth rate of the economy that satisfies needs more and more, ensuring full employment of resources and maintaining stable prices.

An Overall View

• The internal forces of the market: changes in population, consumer behavior and investment, and technological innovation.
• The external shocks: political and military conflicts between countries, droughts, and natural disasters.
• The performance of governments to direct and control the economy through fiscal policy, monetary policy, and external policy.

Aggregate Demand and GDP

The forecast cost of a global economy is known as aggregate demand because it is an aggregation or sum of the demand for... Continue reading "Understanding Macroeconomics: Consumption, Savings, and Aggregate Demand" »

Economic Policies Overview

Economic policies are the ways in which the state intervenes in the economy to achieve specific economic objectives.

Types of Economic Policies

Fiscal Policy

Fiscal policy involves the government's actions regarding public sector revenue (fundraising) and expenditure to influence the economy.

• Discretionary Fiscal Policies: Intentional government actions to influence income or expenditure.
  • Public Works Programs: Aim to increase production, employment, and infrastructure.
  • Employment Plans and Training: Short-term hiring and worker training initiatives.
  • Transfer Programs: Regular or temporary payments to protect disadvantaged groups.
  • Tax Rate Modifications: Adjusting tax rates to influence disposable income and consumption.
• Automatic

Understanding Companies

What is a Company?

A company is an organization created by a person or a group of people to achieve specific objectives, typically economic, by providing inputs and generating outputs.

Classifying Companies

By Sector:

• Primary Sector: Obtaining natural resources and raw materials.
• Secondary Sector: Transforming raw materials into consumer goods.
• Tertiary Sector: Providing services to citizens (e.g., trade, transportation, administration).

By Number of Employees:

• Micro: Fewer than 10 employees.
• Small: Fewer than 50 employees.
• Medium: Fewer than 250 employees.
• Large: More than 250 employees.

By Ownership:

• Private: Capital and control are in private hands.
• Public: Capital and control are held by the state.
• Mixed: Capital is both public

Key Business Formulas

• Total Cost (TC): TC = FC + VC
• Average Total Cost (ATC): ATC = TC / Q
• Average Variable Cost (AVC): AVC = VC / Q
• Revenue: Price per Unit x Units Sold (P * Q)
• Profit: Revenue - Total Cost

Business Criteria Classification

1. According to the Nature of Economic Activity

• Primary-sector firms: Obtain useful resources from nature. Includes agriculture, mining, fisheries, livestock, etc.
• Companies in manufacturing or processing: Develop productive activity to physically transform some goods into others more useful for use. This area includes industrial and construction companies.
• Companies in the tertiary or services sector:
  • Commercial: Drive an increase in offering goods to consumers where and when they need them.
  • Service: Meet needs

Item 3: The International Economic Order (IEO)

3.1 The IEO and the Competitive Paradigm

The International Economic Order (IEO) consists of a set of rules governing international economic relations. Its goals are to prevent international crises, encourage and facilitate free trade, and promote economic growth. After World War II, the IEO was established to facilitate economic development in devastated countries. The Bretton Woods conference of allied countries agreed to create a series of institutions (IMF, World Bank) and established the gold standard. This system was a great success for 25 years but started to falter due to the inability to maintain the gold standard and the international oil crisis. The IEO has evolved, transitioning from one... Continue reading "International Economic Order and Monetary Systems" »

Managing Business Taxes in Argentina

When you want to establish a business in the city, you must register for Gross Income Tax.

Understanding Different Levies

• MLP (Silver City): Local governments do not charge taxes, but rather levies, the proceeds of which are earmarked for a particular purpose at the same rate.
• Services: Not required, may be provided by the state or by individuals. The amount payable depends on the use/consumption made.
• Taxes: Required by law; only the state may collect payments. The amount payable is the same for everyone, regardless of other aspects.

Simplified Tax Regime

Monotributo: A regime for small taxpayers that simplifies tax collection. If a person's annual sales do not exceed $144,000, they can enroll. This removes the... Continue reading "Business Taxes and Financial Operations in Argentina" »