Economy, GDP/GNP and taxes
Measures the value of production based on nationality
GNP
Who is in charge of fiscal policy and who is in charge of monetary policy?
Fiscal - government through SHCP
Monetaria - Central Bank / Banxico
Type of economic model where the market regulates itself
Market Economy
Index that measures economic growth
GDP
Definition of international trade
Purchase and sale of goods and services between different countries.
(Exports/Imports)
Study of aggregate economic decisions
Macroeconomics
The two factors controlled by fiscal policy
Taxes and government/public spending
Type of economic model used in the following countries:
Uruguay, Sweden, Denmark, Norway, etc.
Mixed economy
Index measuring education, income, and health. It was created by UNDP.
Human Development Indiex (HDI)
List two advantages of free trade and one disadvantage.
Advantages:
- Greater variety
- Lower costs and prices
- Greater cooperation
- Promotes innovation and productivity
Disadvantages:
- Dependency
- Does not focus on domestic industry
Taxes applied to persons (natural and legal)
Direct taxes. Ex. Income Tax (ISR)
Three factors controlled by monetary policy
Open Market Operations (Bonds/Banknotes), Reserves and Interest Rate
“As long as people pursue their own interests, there is no need for the state to intervene, because the market regulates itself.” What concept is this?
Invisible Hand
The closer this index is to 0, the greater the equality. The closer it is to 1, the greater the inequality.
Gini Index
List two advantages and one disadvantage of protectionism.
Advantages:
- Prevents dependency
- Helps GNP
- Increases employment and tax revenue
Disadvantages:
- Higher prices
Taxes applied to the consumption of goods and services
Indirect Taxes. Ex. IVA
Explain the importance of Banxico
The importance of the Bank of Mexico lies in the fact that, as the central bank, it preserves the value of the national currency and promotes the country's economic stability.
Give an example of a country for each economic model: market, authoritarian, and mixed.
1. U.S.
2. USSR/Cuba
3. Nordic countries / Uruguay
Explain what the Gini index measures.
It measures the distribution of wealth in a country. A country may have a high GDP, but if wealth is highly concentrated, the majority of the population may have a low quality of life.
List all levels of economic integration in order (from least to most).
Free Trade Area, Customs Union, Common Market, Economic Union, Full Economic Union
What's the difference between GNP and GDP?
GDP - measures production within a country (geographical criterion)
GNP - measures production corresponding to a nationality (nationality criterion)
Explain the type of policy that is applied during a period of expansion or high inflation.
Restrictive
- fiscal: increases taxes and reduces public spending
- monetary: decreases money supply and increases interest rates
Why does the State own the means of production in an authoritarian economy?
If the state owns the means of production, it can accumulate wealth and distribute it to reduce inequality.
Explain the difference between economic growth and development.
Growth is the increase in wealth, while development is how that wealth is used to improve social well-being.
Explain the difference between a Free Trade Area and an Economic Union.
FTA: Countries establish negotiating “blocs” or treaties, but outside of these agreements they can do whatever they want.
Economic Union: Countries are strongly integrated, have a common currency, and share common economic policies.