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

Economic Crises in Mexico (1976-2008)

Defining Economic Crisis

An economic crisis is characterized by a decline or stagnation in output and real incomes, leading to reduced employment and an uneven distribution of national wealth and income.

The 1976 Economic Crisis

1. Fiscal disorder in the U.S.
2. The Bretton Woods Agreement established the dollar as the reserve currency for all countries.
3. External financing of the fiscal deficit and current account.
4. In 1973, the Bretton Woods arrangement collapsed, and flotation was established between currencies.
5. High petroleum prices and increased contributions.
6. Excessive government spending.
7. Public debt as a percentage of GDP: 12% in 1970, rising to 35% in 1976.
8. Increased foreign loans and bank credit in Mexico.
9. Central

External Financial Resources: Medium and Long Term

Companies require various financial resources. Besides providing its own funding, a business often needs to utilize external financing. Medium and long-term funding resources are those which the company utilizes over a period longer than one financial year and, once that time has passed, must repay, typically with interest. Key medium and long-term resources include:

1. Medium to Long-Term Loans

Firms borrow from credit institutions (banks, savings banks, etc.) to finance purchases of fixed assets. Fixed assets are all those goods that the company uses to produce (i.e., machinery, buildings, computers, etc.). Due to their high value, companies usually seek medium to long-term loans. This money...

Core Management and Leadership Principles

Authority and Power Dynamics

• Authority: The right to issue orders, acquired when a person demonstrates the ability to enable others to develop effective work.
• Power: Derived from hierarchical position, representing the ability to influence others to enforce organizational goals.

Leadership Styles

Common leadership models include:

• Autocratic ("X"): The leader makes decisions unilaterally without consulting subordinates.
• Democratic ("Y"): The leader takes into account the decisions and input of subordinates.
• Laissez-faire ("Z"): Decision-making authority is delegated entirely to the working group.

Business Environment Analysis

Macroenvironment Factors

These external factors influence the organization broadly:

• Legal

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

Financing Your Company

Obtaining the necessary funds is crucial for the optimal functioning of a company.

Types of Financing

Self-Financing

• Capital contributed by partners
• Reserves and undistributed profits (self-financing):
  • From enrichment: Legal Reserve, Statutory Reserve, and Voluntary Reserve
  • Maintenance: Depreciation and provisions

External Financing

• Based on Term:
  1. Short Term: Commercial loans, factoring, discounting of bills, financial credits, and bank loans.
  2. Long Term: Loans, leasing, renting, loans for fixed assets, bonds or obligations.
• Based on Origin:
  1. Internal Funding: Reserves or undistributed assets.
  2. External Funding: Other sources.
• Other External Funding:
  1. Grants and aid: Economic quantities that governments provide to entrepreneurs who meet

Key National Production Metrics

Gross Domestic Product (GDP)

GDP is the sum of production, valued at factor cost, of all productive sectors comprising the economy of a country. It reflects all final goods and services produced within the borders of the country in a year.

The GDP growth rate measures the relative importance of the change in GDP between two consecutive periods. GDP is the most commonly used indicator for studying a country's economy.

Gross National Product (GNP)

GNP is the market price value of all final goods and services produced by factors of production owned by the country's residents, regardless of whether the production occurs inside or outside its borders.

It differs from GDP by showing the output generated by factors of production...

Characteristics of Spanish Industrial Activity and Geographic Location

• The Spanish industry was oriented towards import substitution, strongly dominated by labor-intensive light industries and producing specialty items for the market. Notable exceptions included areas with significant mineral deposits, such as Cantabria.
• A predominance of small enterprises, utilizing simple technology.
• Industrial dominance was concentrated in coastal regions, particularly Catalonia and the Basque Country, with inland areas showing lower industrial activity, even compared to Madrid.

Slow Industrial Growth and Tariff Protection (1900-1936)

Key developments affecting Spanish industrial growth during this period included protectionism, which shielded industries from...

Spanish Financial System

This constitutes the set of institutions mediating between the plaintiffs and the suppliers of financial resources. The fundamental distinction between different financial intermediaries is that they are divided into bank and non-bank. Bank workers are those whose financial assets are generally accepted as an indirect means of payment, that is, money. Non-bank financial intermediaries are characterized by issuing financial assets that are not money in the strict sense and are liabilities for them.

Bank Financial Intermediaries

Bank financial intermediaries create money by granting loans for an amount greater than total reserves. They form, by amending the banking system, the money supply, that is, the quantity of existing...

Core Concepts in Finance, Marketing, and Taxation

Investment Funds

• Mutual Fund

  Funds in which small investors can invest.

• Hedge Fund

  Private investment funds typically reserved for wealthy investors.

Banking and Grammatical Distinctions

• Commercial vs. Private Bank

  Commercial banks handle smaller investments and general banking services, while private banks focus on managing large investments and providing specialized services for high-net-worth individuals.

• Rise / Raise Distinction

  These verbs have similar meanings related to upward movement, but their grammatical usage differs significantly:

  • Rise is generally intransitive (e.g., the sun rises).
  • Raise is generally transitive (e.g., you raise the price).

Marketing Strategy and Terminology

• Distribution Channel

  All

Key Business Financing Methods

Bond Issuance (Borrowing)

When a company needs large sums of money, it can obtain a loan. This type of loan is a form of financing typically reserved for large companies. To arrange it, the company divides the total money needed into small, equal amounts and issues securities, such as debentures or bonds. These obligations are offered to the general public, so investors who buy them become creditors of the company. They acquire the right to receive interest and the repayment of the principal amount at agreed-upon times. The company receives funds in exchange for delivering these bond securities, which constitute an acknowledgment of debt. Normally, these loans last for more than 5 years, with partial repayments...