The financial system, the firm and innovation

Explain what the financial system is and what its basic function is: what does it do with the money of people who save, and to whom does it lend it? Give an example from your neighbourhood.

Explain the difference between a current account and a savings account (or deposit): what each one is for and why the second usually pays some interest while the first does not. Give an example of using each one with your pocket money.

Explain what a cooperative is and how it differs from a firm with a single owner: who decides, who keeps the profits and what happens if expenses have to be cut. Give an example of a cooperative that could exist at your school.

The local bakery wants to buy an oven worth $6.000\ \text{€}$ that would allow it to sell twice as much bread. It does not have that money saved. Explain its options (a bank loan, waiting years to save up, looking for business partners) and what it gains and risks with each option.

A neighbourhood bakery wants to renovate its workshop ($18.000\ \text{€}$). The bank offers it a $5$-year loan with instalments of $340\ \text{€}$ a month.

1. a) Calculate how much it will pay in total for the loan and how much financing itself costs it.
2. b) Analyse two alternatives (saving up for years, finding a partner who puts in the money) and explain what the bakery gains and loses with each one compared with the loan.

The student cooperative at the school asks the PTA for a microloan of $200\ \text{€}$ to buy materials for the market, to be repaid in $4$ months at a simple interest rate of $5\ \%$ per annum.

1. a) Calculate how much interest the cooperative will pay in total and how much it will return to the PTA.
2. b) Analyse whether you think this is a good way to secure funding compared to selling advance tickets or having each member contribute money, stating one risk of each alternative.

Explain in your own words what a company's social responsibility is and give three concrete examples your school cooperative's breakfast stall could have (suppliers, waste, treatment of the team).

A business is socially responsible when it thinks about more than just profit. Classify these actions by a juice factory as responsible or irresponsible and justify your answer: (a) buying fruit from local farmers at a fair price; (b) dumping pulp residue into the river to save money; (c) hiring local residents with training included; (d) advertising 'natural juice' when it contains $40\ \%$ added sugar.

The clothing chain 'Baratísima' sells T-shirts at $3\ \text{€}$ and is the company employing the most young people in your city, with $4$-hour contracts and high turnover. Its defenders say it gives work to those without qualifications; its critics, that such work is not enough to live on.

1. a) Analyse what social responsibility can be demanded of a company beyond 'providing jobs' (job quality, training, stability).
2. b) Take a stance: is a precarious job better than no job? Argue and propose one measure that would improve the situation without closing the shop.

Distinguish product innovation from process innovation using two examples from a bakery: (a) inventing a gluten-free bread that did not exist before; (b) changing the kneading method to take half the time. Add your own example of each type applied to your school.

Match each innovation with its type — product, process or business model: (a) a pizzeria invents the cauliflower base; (b) a bookshop switches to charging a monthly book subscription instead of selling books individually; (c) a bicycle factory reorganises the line to assemble each bike in half the time. Explain your choice in one of the cases.

Ten years ago in your town hardly anyone travelled by bike; today there are cycle lanes and bike-sharing schemes, and thousands of car journeys have disappeared. Explain what that innovation consisted of (was it technological, business model, or social?) and name two social transformations it has brought about.