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

Just-in-Time (JIT) and Quick Response (QR)

Just-in-Time (JIT), meaning "at the right time", ensures that raw materials and finished products are available to the production process or the end user precisely in the class, quantity, and time required. The Quick Response (QR) technique is a management system that uses information technology for real-time information about market demand and responds instantly, reducing production costs and maintaining stocks.

Distribution Channel Selection

Choosing the best option among possible distribution alternatives is crucial. Decisions include single or multi-channel, direct or indirect. The most frequent activities in a company are:

• Development of the company's distribution plan.
• Determining the geographic scope

The 1929 Development Crisis: Black Thursday

October 24, 1929: US and World Case

Imposed solutions and the end of the crisis:

Solutions adopted in the 1930s:

Countries tested ways out of the economic depression:

• Reduction of public spending
• Restriction of appropriations
• Reduction of social expenditures and wages
• Reduction in imports

The key was to act on the offer, promoting a decrease in volume. Liberal policies failed and led to more unemployment and recession. Britain maintained this economic policy until 1931, the USA until 1933, and France until 1936.

Impact of the Crisis

The impact was tremendous in all aspects. Economic disasters like the collapse of banks and the closure of many companies. Socially, arrests, homelessness, and increased crime. In... Continue reading "The 1929 Great Depression: Causes, Impact, and Solutions" »

Salary and Work Regulations

Salary

Salary compensates employees for their work. Employers are obligated to pay at least the minimum wage established by law.

Payment Methods

• Money: The most common payment method.
• In Kind: Goods or services provided as compensation.

Wage Rates

• Unit time
• Work unit
• Mixed system

Payment of Wages

Wages must be paid on the agreed date, within working hours or immediately after, at the workplace. Employees are entitled to advances.

Workday and Working Hours

The workday refers to the number of hours an employee works within a specific period. The work schedule specifies when an employee must work each day.

Normal Working Hours

• The maximum workday is 40 hours per week.
• Shift workers successively occupy the same jobs, following a specific

What is a financial statement?

It is a document intended to provide information about a company's financial situation to support decision-making.

What is the financial situation of a company?

It reflects the company's performance based on its operations up to a specific date or period, as shown in its financial statements.

How are financial position and income statements linked?

The primary link is the net profit or loss for the period, calculated on the income statement, which impacts the equity section of the statement of financial position (balance sheet).

What are common financial statements?

Common financial statements include:

• Income Statement (or Profit and Loss Statement)
• Statement of Financial Position (or Balance Sheet)
• Statement of Cash Flows
• Statement

Porter's Five Forces is a model proposed by Michael Porter (1985) that outlines a simple scheme of five forces that shape the structure of an industry.

Threat of New Competitors

The threat of new competitors should direct attention to potential entrants to the industry. New participants act as one of the concepts of strategies, the concept of entry barriers, and their relationship to industry profitability. Barriers to entry depend on factors such as:

• Economies of scale
• Product differentiation
• Intensity of capital requirements
• The importance of learning effects
• Degree of governmental regulation
• Ease of access to distribution channels
• Critical raw materials
• Advanced technology, etc.

Rivalry Between Industry Competitors

The rivalry between competitors is... Continue reading "Porter's Five Forces: Shaping Industry Structure" »

Foreign Investment Mechanisms Before 1914

• The mechanism for foreign investment consisted of a host of institutional arrangements from one country to another: markets for foreign exchange, stock and bond markets, central banks, private banks, and brokers.
• Great Britain was the largest foreign investor before 1914. In 1914, British investment abroad amounted to 43% of the world total. Destinations: government bonds of several European countries, the United States, Latin American countries, and the British Empire.
• France was the second-largest foreign investor. Destinations: Spain, Portugal, Italy, Belgium; and Russia.

The Reaction to Globalization and the Return to Protectionism

The crisis, plus the interest of some groups (mainly agriculturists)... Continue reading "Foreign Investment & Gold Standard in Globalization" »

Understanding the Balance of Payments

2.1 The Current Account includes transactions that generate income variations within a single economic year. It consists of four sub-balances:

• Trade Balance: Affects the sales and purchases of physical and tangible assets.
• Balance of Services: Affects the exchange of services, such as tourism, travel, freight, and insurance.
• Balance of Income: Includes intellectual property rights and investment income like dividends.
• Balance of Transfers: Includes income transfers from migrant remittances and grants.

2.2 The Capital Account Balance:

• Capital Transfers: Such as cohesion funds from the European Union.
• Purchase or Sale of Intangible Assets: Including copyrights and patents.

2.3 The Financial Account: Contains data... Continue reading "Understanding Balance of Payments: Current, Capital, and Financial Accounts" »

The Company

A company is an entity that combines a set of factors of production, organized and operated in the best possible way. Through revenue from the sale of goods and services, it ensures a profit and achieves targets set in a plan.

The Company as a System

A system is a set of interrelated elements and their environment, arranged so that, through a process of transformation, a set of inputs becomes a set of outputs.

Business System Features

• It's a global system: All elements are interrelated, so a change in any of them affects the others.
• It's a self-regulating system: The balance is achieved through the actual interaction between its elements.
• It's an open system: It is in permanent contact with the outside, i.e., with its environment.
• It is

Yield Curve Theories

What explains the different forms the yield curve can take? Two main theories attempt to explain this:

1. Theory of Expectations
2. Theory of Market Segmentation

Theory of Expectations

There are three main forms within the theory of expectations:

1. Pure Expectations Theory
2. Liquidity Premium Theory
3. Preferred Habitat Theory

a) Pure Expectations Theory: According to this theory, forward rates exclusively represent the expectation of future rates. In statistical terms, they would be an unbiased estimate of spot rates that will prevail in the future.

b) Liquidity Premium Theory: To tempt an investor to hold long-term bonds, they should be offered at least an interest rate that is higher than the average of future expected rates, plus a premium... Continue reading "Understanding Bond Types and Yield Curve Theories" »