Key Economic Concepts

• Economics involves activities societies undertake to produce, distribute, exchange, and consume goods and services, impacting all economic agents.

Key Economic Concepts

• Production is the process of creating goods and services using resources like land, labor, and capital.

• Distribution refers to how goods and services are allocated among individuals, businesses, and governments, concerning justice and equity.

• Consumption is the use of goods and services by individuals and families, influencing the demand and production.

• Exchange involves trading goods and services at local, national, or international levels, relating to commerce and economic transactions.

• Markets are places, physical or virtual, where buyers and sellers interact to exchange goods and services.

• Money facilitates the exchange of goods and services, acting as a payment method and a unit of measure for economic valuation.

• Saving is unspent money whereas investment is using money for long-term returns via assets or new ventures.

• Monetary policy involves managing the money supply and interest rates whereas fiscal policy manages government income and expenses.

• Unemployment signifies a person seeking a job but not finding one, indicating a country's economic health.

• Inflation is the general increase in prices over time, which affects people's purchasing power.

• Globalization involves the integration of international markets, promoting the free exchange of goods, services, capital, and people across countries.

• Economic inequality refers to the uneven distribution of wealth and resources in a society, potentially causing gaps among different population groups.

• Economic growth is the sustained increase in the production of goods and services, which usually improves living standards.

• Natural resources are materials from nature such as water, land, and minerals, used for production.

• These aspects are interconnected, forming an economic system that influences daily life and national development.

• The financial system is a network of institutions, markets, and tools that facilitate the movement of money within the economy and allocate resources.

• The financial system consists of banks, exchange houses, stock exchanges, insurance companies, investment funds, and more.

Actors in the Financial System

• The State regulates and supervises the financial system to ensure stability, issues currency, and sets monetary policies.

• Businesses borrow money, issue bonds or stocks, and manage finances via financial institutions.

• The population includes individuals who save, borrow, and receive payments, also purchasing goods and services.

• The financial system eases the exchange of goods and services by managing money and credit access.

• The financial system contributes to economic growth by directing savings towards productive investments.

• Money circulates efficiently within the economy because of the financial system.

Banking Functions

• Financial intermediation involves accepting deposits and lending money.
• Credit generation offers loans to stimulate economic growth.
• Payment management enables electronic money transfers.
• Investment services manage investment funds.
• Support for economic stability comes from regulating interest rates and controlling inflation.

Monetary System

• Mexico's monetary system is fiat money, where the value of the peso is based on trust in the government, not physical reserves.
• Traditional economies involve direct exchange but limit specialization unlike modern economies.
• The financial system's advantage is enabling the exchange of goods and services within a globalized economy.

Traditional vs Financial System

• A traditional economy uses bartering whereas financial system used credits, money and saving
• Traditional economies have limited local access versus global online access in financial systems.
• A traditional economy requires matching needs which lowers efficiency, financial systems enable high-speed global transactions.
• Traditional economies have risks limited to local trust, financial systems have global financial risks.

State Banking Institutions in Mexico

• Banco de México (Banxico) regulates currency emission and monetary policy.
• Nacional Financiera (Nafin) supports small and medium-sized businesses.
• Development banks like INFONAVIT and FOVISSSTE aid workers with housing issues.

Legal Framework

• Mexico's financial entities are regulated by laws such as the Credit Institutions Law and the Securities Market Law.
• The Mexican Financial System (SFM) ensures compliance with regulations.
• Financial entities have power in society because they control access to credit and resources, influencing economics.

Access to Banking

• Formal employees accesses financial products such as savings, credit and investment services.
• Informal employees lack formal access, but can have mobile banking or saving cooperatives; many lack access due to lack of documentation.
• Unemployed individuals have limited access to bank products but government assistance is distributed through bank accounts.