Understanding Key Economic Concepts and Mexican Finance

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 production and trade
3. Influences price fixing
4. Economy of effort

Credit operations have three elements:

1. The loan
2. The term
3. The confidence

Public Credit

Public Credit: Is awarded to a country where the state is a borrower and a lender can be involved.

Private Credit

Private Credit: Is granted to individuals.

Central Banking and the Mexican Financial System

Central Banking

Central Banking: An institution established and controlled by the state (X) where functions are centralized for commercial banks. It aims to regulate the monetary system and the volume of credit (D).

Bank of Mexico

Bank of Mexico: The central bank, established on August 28, 1925.

Regulatory Change

Regulatory Change: The central bank serves as a stabilization fund (X) for payments made abroad and regulates the change.

Historical Milestones

• First Trade Code: 1884
• Banking Law: 1897
• First Banking Convention: 1924

Fiscal Policy and Public Finances in Mexico

Fiscal Policy

Fiscal Policy: The governmental address of the economy through the volume and content variation of taxes (D).

Public Finances

Public Finances: Address monitoring of resources (Q) obtained by the state (X) through various means for optimum results.

Excise Tax

Excise Tax: Influencing the taxpayer, taxing the same fortune.

Excise Tax: Charged for use, indirectly responsible to the taxpayer.

Public Expenditure

Public Expenditure: The quantity (Q) of money the state uses to comply with its duties (D).

Expenditure Budget

Expenditure Budget: A ranking of public needs (Q) expressed as an essential instrument of fiscal policy (N).

Lending or Borrowing

Lending or Borrowing: Taken or contracted by the state when normal resources to finance public expenditures are inadequate.