U.3 Flashcards
(34 cards)
Explain the parties involved in the economy
The economies main parties are :
Producers: people involved in creating goods and services, which in exchange, they earn a profit (usually money)
-supply: the amount of a good or service that is available
Consumers: people who acquire goods and services through the payment of money
-demand: the quantity of a good or service that consumers wish to acquire
What are the 3 phases involved in the economy?
The production of goods: includes natural resources, technology and human labour
Distribution: by which goods are made available to consumers (to a shop)
Consumption: the exchange of goods for money
What are the economic sectors?
Primary sector: involves the extraction or collection of raw materials from nature (which may be consumed directly or used in industry)
Ex: farming, fishing, livestock farming, arable farming and forestry
Secondary sector: transforms raw materials into goods. It comprises the industrial processes that use the resources provided by the primary sector
Ex: mining, energy, construction and industry
Tertiary sector: provides services to satisfy people’s needs (that is why it is called the services sector)
Ex: teaching, trade, transport, healthcare, tourism, leisure and administration
a new sector has appeared:
The demand for advanced and more specialised services has given rise to (created) a:
fourth sector: which includes activities involving advanced scientific and technical knowledge (which require high level of academic training)
define production factors:
They are the goods and services basic resources
Name the production factors:
-Natural resources: natural elements that are extracted unchanged from nature
raw materials: for producing other goods
energy sources: generate power needed to operate factory machinery and the means of transport for distributing goods (such as coal, petrol or gas…)
-Labour: the contribution of people to the production process. It depends primarily on the worker’s dedication, the means at their disposal and their experience.
-Capital: refers to both physical capital in the form of durable goods that the economic activity requires (facilities, machinery…) and financial capital (money)
-Technology and knowledge (R & D): Scientific and technological developments make production more effective and efficient
New machinery and technology change the way goods and services are produced and distributed. However, there must be sufficient capital to integrate them and train workers
define economic agents
play a key role in production and distribution. They make decisions that have important consequences for the production system
name the economic agents
-People: They work in exchange for wages (that is what they earn every week), for companies or the state (in the case of public sector workers and civil servants)
-Companies: they produce and distribute goods and employ people, in exchange, they earn economic profit.
They also pay taxes to the state and make investments to develop their products and improve their production
-State: the state’s economic activities constitute the public sector and are funded with taxes from companies and citizens
What’s the capitalism system (type of economic systems) also known as?
a market economy.
What are the main characteristics of the capitalism system?
-prices are regulated through supply and demand. When demand exceeds supply, prices tend to increase. When supply exceeds demand, prices normally drop.
-free initiative to create companies and the private ownership.
-Economic agents are free to operate and establish relations. In doing so, companies strive to maximize profits, and people strive to satisfy their needs. While the state must ensure social wellbeing, it should intervene as little as possible in economic matters.
-Free competition pushes companies to produce more for less and sell more for greater profits.
-Overproduction crisis, when supply grows faster than the demand. They are cyclical (they happen from time to time).
When were Centrally planned economic systems implemented?
(type of economic systems)
During the 20th century in communist countries, which adopted the USSR’s (soviet Union) economic model (Poland, German demo. rep, Czechoslovakia, China, Cuba, etc.).
What happens in the Centrally planned economic system?
The state controls the other economic actors and owns most means of production and distribution. The government therefore determines which goods should be produced, in which amount, their sale price and the workers’s wages. Everything is regulated according to a central plan with which the economic agents must comply.
The mixed economies system is governed by…
the basic principles of capitalism, and most decisions are made by individuals and companies, the 2 private economic agents. However, the state intervenes in economic matters by regulating the market during crises and reducing social inequalities throughout taxes and subsidies.
In richer countries, the mixed economies system is known as…
The welfare state in which wealth is distributed more fairly throughout a progressive tax system (those who earn more pay more), which funds healthcare and social protection.
What’s globalization?
It’s a world wide process characterized by the interconnection of countries’ economies and faster trade and corporate decision-making. This phenomenon, has transformed the economy, territories and society.
What are the 3 sides of globalization?
Economic globalization: integration of local economies into a global economic market.
Political globalization: increasing integration of national policies into one single world policy.
Cultural globalization: spread of western fashion, music, sports, behavior…
Can you explain the causes of globalization?
-increasing independence of countries’ economies
-the strengthening of multinational companies, which produce and sell goods and services in more than one country
-The globalization of financial markets (capital and money circulate quickly and easily between different countries, facilitating trade and investments in companies.
-increased international migration, mainly from economic reasons.
Can you explain the consequences of globalization?
has social and cultural consequences due to the greater contact between people around the world. Lifestyles and consumption patterns become more uniform.
More and more people on all five continents dress and eat the same, listen to the same music, watch the same films…
Migration and tourism have also increased contact among cultures, resulting in a cultural melting pot. The new globalized society tends to be multicultural.
Globalization also increases global problems associated with terrorism, climate change and epidemics.
Terrorism, waged by violent groups that reject the political and social order, uses globalisation and new information technologies to make their attacks more efficient and powerful.
The spread of diseases has also taken on a global dimension.
What is trade liberalization?
It’s the reduction of elimination of barriers imposed on products (tariffs). This makes it easier for countries to trade
What do countries do to promote international trade?
They sign economic agreements to make trade flows more profitable.
What has trade liberalization led to?
to an increase in world trade
What do financial services include?
All activities related to the management of money (like savings) or insurance coverage for goods and people.
What are the financial systems?
They consist of entities, financial assets and markets, which is where economic resources may be exchanged.
name one of the foundations of globalization:
The global financial market.
What does global trade require?
An advances transport and communication network. This is the only way to move goods and services quickly and efficiently. The internet is particularly significant and has produced major developments in commodity, goods, capital and information transitions.
