CCSS3 Unit 5: Economic Activity

CCSS3 Unit 5 Economic Activity p.77

Part 1:The Economy p.78

The Economy is responsible for the use of resources which satisfy the needs/wants of individuals/groups, like food or free time.

Goods are produced to satisfy needs.

            -come in 2 kinds

-Products: material objects (ex. Books)

                        -Services: work done that doesn´t produce a tangible product (ex. Transport)

            -are limited

            -can be bought and sold

            -have a price

            -are produced using different resources, or factors of production

Factors of production are:

                        -natural resources: earth, water…

                        -human resources: people and their labor

                        -capital resources: money, buildings, machinery, equipment…

Part 2: Economic Systems and the Market Economy p.80

2.1 Types of Economic Systems

Economic System = the way a society organizes its economy .

            -Different types

                        -Socialist Economy (planned) = the state controls the majority of the factors of production and decides how the economy should work

                        -Interventionist/Centralized Economy= the state takes actions that affect the economy

                        -Capitalist System/Market Economy = businesses and consumers control the economy with limited involvement by the state.

2.2 The Market Economy: Supply and Demand

The Market Economy = a system where people and companies produce/buy/sell goods/services freely with limited state intervention

            -factors of production belong to individuals/businesses, not the state

            -the government can use economic policy to influence the economy

            -prices are determined by supply and demand

                        -If supply is high, prices drop

                        -If supply is low, prices go up

“The Market” = the method used to exchange goods/services and set prices (not necessarily a physical place)

2.3 Economic Agents

(2 Types)

            1. Families (one or several people)

            2. Companies (organizations that produce goods/services to make a profit)

            3. The State (sometimes)

            1.Families do 2 things in the economy:

                        1. They consume goods/services, spending money and affecting demand.

                        2. They:  are workers

                                    - receive an income they use to buy goods/services

                                    - salaries = main income for families

                                    -use a budget to balance income and expenses

            2. Businesses produce the goods/services

                        -have expenses (workers’s salaries, machinery, rent etc.)

                        -have an income from the goods/services they sell

                        -make a profit if the income is higher than their expenses

                        -are called companies when they belong to several people

            3. The State

                        -offers services (ex. Healthcare, education)

                        - collects taxes (income)

Part 3: The Labor Market and the Globalization of the Economy p. 84

3.1 The Labor market

           

Workers=the human resources

            - we call it the “job market/ labor market”

-most workers are subject to market laws (supply + demand)

- supply = people who want to work

- demand = the number of workers a company needs

Changes in the labor market

            1. Increased UNEMPLOYMENT (more than 50% of the world’s unemployed don’t get any benefits)

            2. ICT (information and communication technology: machines to collect, store, process and analyze info.)

-has revolutionized production methods

                        -increased teleworking (working away from the office)

            3. Workers are becoming more skilled  b/c of education and business needs.

            4. Companies can dismiss their employees and hire others. 

            5. In industrialized countries, workers are demanding fewer hours and a more flexible schedules. HOWEVER, in many countries workers’ rights are not recognized and child labor is permitted.

            6. Working conditions have improved because of collective agreements between trade unions and employer’s associations.

            7. Inequalities remain between men and women: men earn more and women have more temporary contracts.

           

3.2 The Globalization of the Economy p.86

Enormous free market system --> global integration à globalization

-ICT (especially the internet) connects companies all around the world.

-The expansion of multinational corporations have led companies to globalize how and where they produce their goods.

Free trade zones – countries charge no tariffs on import/export of goods from other countries between the zones, but economic policies within each country are independent.

Common Markets – remove tariffs and allow the free movement of people and capital between member countries.  The member-countries adopt a common economic policy towards outside states.

Free trade and globalization are supported by the World Trade Organization (WTO) and the UN, who promote free trade between members.