UNIT 1: THE ECONOMIC ACTIVITY. 3RD ESO
ISABEL GARCÍA-VELASCO teachermsisabel.com
WHAT ARE WE GOING TO STUDY IN THIS UNIT? 1. The economy and the factors of production. 2. Economic systems and the market economy. The economic agents. 3. The labour market and the globalization of the economy.
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Glossary Let's start creating our own glossary of terms. In a new sheet of the folder, we are going to add the terms that we explain along the unit. The glossary should be at the end of the notebook. WORDS FOR THE GLOSSARY WILL BE IN PINK.
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1. THE ECONOMY AND THE FACTORS OF PRODUCTION
Hello! Do you know what economy is?
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The economy is responsible of the management or use of the resources of a community (family, country...)which satisfy the needs and wants of individuals and groups: food, free time, etc. The resources are things or properties that a person or a country has and that can be used for economic benefit.
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People produce economic goods to satisfy their needs and wants. Economic goods include: ✗ Products: such as food, books or computers. ✗ Services: work that is done for someone: transport, education or hairdressing. Economic goods are limited, you can buy and sell them and that is why they have a price.
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Economic activities produce economic goods using different resources called factors of production. These can be: ✗
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Natural resources: earth, water, plants, animals, etc. Human resources: people and their labour. Capital resources: money, buildings, machinery, equipment, etc.
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Could you run your own company? The T-shirt company activity.
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2. ECONOMIC SYSTEMS AND THE MARKET ECONOMY
2.1 TYPES OF ECONOMIC SYSTEMS An economic system is the way in which a society organises its economy. There are different types: ●
Planned or socialist economy: the state controls the majority of the factors of production and the economy.
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Capitalist system or market economy: businesses and consumers control the economy.
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Mixed Economy: It combines both capitalism and socialism. Here, means of production are owned and controlled by both the state as well as private players.Mixed economy has emerged as the dominant economic system in several countries like Australia, Iceland, United Kingdom, Japan, and Italy. 11
2.2 THE MARKET ECONOMY: SUPPLY AND DEMAND The market economy is the system in which people and companies produce, buy and sell goods and services freely with only limited involvement by the state. The factors of production: factories and equipment, belong to individuals and businesses, not the state.
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The government can use economic policy to influence the economy. The market is the method used to exchange goods and services and set prices. Supply and demand determine the prices of goods and services.
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Private Property. Most goods and services are privately-owned. Freedom of Choice. Owners are free to produce, sell, and purchase goods and services in a competitive market. Motive of Self-Interest. Everyone sells their wares to the highest bidder while negotiating the lowest price for their purchases. Competition. The force of competitive pressure keeps prices low.
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2.3 THE ECONOMIC AGENTS An economic agent is a person, company etc., that has an effect on the economy of a country, for example by buying, selling, or investing. ★
Families consume goods and services, having and influence on the demand and prices, but they also influence in another way, they contribute to the factors of production as workers. 17
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Businesses produce the goods and services. They have expenses, such as the workers’ salaries, investments in machinery, etc., but they also have income from selling their products and services. If income is higher than expenses the company makes a profit.
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The State intervenes in different ways, for example offering public services, such as healthcare or education and collecting taxes.
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Via Slideshare 19
Define the following terms and write a sentence with each of them: ✗ ✗ ✗ ✗ ✗
Budget Salary Income Investment Profit
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3. THE LABOUR MARKET AND THE GLOBALIZATION OF THE ECONOMY
3.1 THE LABOUR MARKET: A labour market is the place where workers and employers interact with each other. In the labour market, employers compete to hire the best, and the workers compete for the best satisfying job. (Economic Times, 2014)
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These are the characteristics of the labour market nowadays: ✗
Unemployment: it has increased in the last decade. Most than a half of the unemployment people don't receive any type of benefit or help.
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ICT: thanks to the advances in information and communication technology the labour market has changed, some people can work from their own homes, it is called teleworking.
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Education: workers are becoming more qualified thanks to the educational opportunities.
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Working conditions: have improved as a result of the new laws and agreements between trade unions and employers’ associations. 23
ACTIVITY: Do you think that all the countries respect this agreement. Investigate about it and write a composition in which you explain the current situation of children labour.
Article 32 of the Convention on the Rights of the Child states: "States Parties recognize the right of the child to be protected from economic exploitation and from performing any work that is likely to be hazardous or to interfere with the child's education, or to be harmful to the child's health or physical, mental, spiritual, moral or social development..."
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3.2 THE GLOBALIZATION OF THE ECONOMY: Globalization represents the global integration of international trade, investment, information technology and cultures. Government policies designed to open economies domestically and internationally to improve development in poorer countries and raise standards of living for their people are what drive globalization.
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What is the relation between globalisation and multinationals?:
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MORE ECONOMIC VOCABULARY
Balance of Payments (BOP)
The difference between how much a country spends (for example, on military programs and social programs) and how much a country earns (through taxes) and borrows (through loans) Borrower The person / country who has taken out a loan Conditiona The conditions (rules) that governments lity agree to when they seek loans from the IMF Currency The type of money (e.g. Euro, Dollar, Yen, Pound etc.) Debt Relief When the IMF no longer requires a / Loan government to pay back part or all of its Forgivenes debt s Default Developed Countries
When a country is unable to pay back its loan A country with a high GDP, high per capita income, high standard of living, etc.
Economic Stability Economy Exchange Rates Globalizati on Gross Domestic Product (GDP) Gross National Product (GNP)
The absence of large changes (fluctuations) in the economy The state of a country in terms of the production and consumption of goods and services and the supply of money The rate at which one currency can be exchanged for another Making it easier to buy and sell across countries. This is the process of countries coming together as one big, global economy The monetary value of all the finished goods and services produced within a country's borders in a given year. Is the market value of all the products and services produced in one year by labor and property supplied by the country’s citizens. Includes the GDP+any any income earned by residents from overseas investments-income earned within the domestic economy by overseas residents.
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Human Development Index (HDI)
This is a number between 0 and 1 that´s calculated using life expectancy, literacy rate, education level (e.g. degree) and income per person. The higher a country’s number, the more developed it is. For example, the US has an HDI of .914
Interest Least Developed Countries (LDCs)
The fee you pay for taking out a loan Countries with very low incomes levels and high poverty rates (including high levels of hunger and child mortality, and low levels of literacy and school enrollment)
Lender Loan
The person / country that loans the money Something (usually money) that is expected to be paid back
Natural Resources
Materials occurring in nature, which can be used for economic gain (e.g. oil, wood, coal, etc.) How much money countries are obligated to provide to the IMF. This also determines their voting power in the IMF. An artificial “currency” used by the IMF and defined as a "basket of national currencies." The IMF uses SDRs for internal accounting purposes.
Quota Special Drawing Reserve (SDR) Underdeveloped / Developing Countries
A country with a low GDP, low per capita income, low standard of living, etc.
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SUMMARIZING... It's time to summarize, review the unit and organize all the information. To do that you’ll have to create a diagram in your notebook, with the most important information about the unit.
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HOW MUCH YOU KNOW ABOUT THE ECONOMIC ACTIVITIES?
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That’s the end of this unit!
Any questions? You can find me at: ✗ ✗
@teachermsisabel contactme@teachermsisabel.com
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