Economic Trends, Principles, and Factors

Current Economic Trends

Today, economics presents certain trends:

• More Realistic: It's based not on abstract positions, but on the behavior of different social groups.
• More Humane: It analyzes the free activity of individuals and social groups that influence the economic system.
• More Social: The community aims at full employment, welfare economics, and social justice.
• More Normative: It not only serves as an instrument to interpret reality but also as a guide to act on it.

The Origin of Economic Laws

Economic laws arise from:

• Hypotheses: Data sets that provide a simplified picture of reality.
• Statistics: The overall result of a myriad of economic facts.
• Trends: Explain casual relationships between economic variables over time.

Objectives

To take into account the cause and effect relationships resulting from scientific reasons, regardless of the participants.

Economics as a Social Science

We say that economics is a social science; its study objective is human society, capable of changing socio-economic conditions.

To draw its conclusions, the economy relies on other disciplines, such as geography and sociology.

Value and Utility

Value

Value refers to the quality that makes a thing appreciated by the consumer. Value is a quality that has to do with the effort required to obtain the good or service in question.

• Use Value: A function of the utility of the property.
• Exchange Value: Gives purchasing power to those who possess that good or service.

Utility

Utility: The ability of goods to satisfy needs. It is a characteristic property of goods.

Economic Crisis

Crisis in Economy: The essential problem of the economy, and of this science, is to combine the scarcity of goods and resources with needs that are growing, diverse, and recurrent.

Economic Activity

Economic activities are those acts, performed directly and consistently. An economic act is any voluntary and rational effort made in order to obtain some profit.

Elements of Economic Activity

• Factors of Production: Land, labor, capital.
• Technology: A given level of technology.
• Specialization: Division of labor.
• Exchange: Purchase and sale of inputs and finished products.

Economic activities can be primary, secondary, tertiary, or quaternary.

Factors of Production

Land

Land is composed of all primary resources, or raw materials (flora, fauna, mining, etc.).

Labor

Labor: Population:

• Active: [Participates in the production process]
  • Employed: Employed in the strict sense (those who work and are paid a salary).
  • Underemployed: Marginally active (a few hours, changing).
  • Unemployed: Meet age, physical, and mental conditions, but cannot find work, despite looking for it.
• Inactive: [Only active consumers] Pensioners, retirees, students, housewives, people who do not seek employment, and those unable to work.

Operators

Operators: We call those operators who carry out the production of goods or services in society. Operators require the existence of productive factors to develop their activities. When we add the public sector, we have the state. (Families and businesses = private sector).

Types of Companies

Companies can be classified:

1. By Sector:
   • a. Transformation
     • Agricultural-Livestock
     • Industrial
     • Extractive
   • b. Business
   • c. Services
2. By Capital Purpose:
   • a. Private
   • b. State
   • c. National
   • d. Privatized
3. By Size:
   • a. Small
   • b. Medium
   • c. Big
4. By Legal Regime:
   • a. Sole Proprietorship
   • b. Societal (civil, commercial)
5. By Capital Source:
   • a. National
   • b. Foreign
   • c. Multinational