THE ECONOMY

3º ESO

Unit 4

1- What is economic activity?

Economic activities are all the processes used to obtain the good and

services that people need.

There are three phases:

1. Production

2. Distribution

3. Consumption

History of payment

1- Barter: direct exchange of goods.

2- Natural coins: valuable natural items.

4- Paper money

3- Metal coins

5- Bills of exchange or cheques. 7- New technologies and online

payment.

6- Plastic and electronic money

Sustainable economy

The use of various strategies for employing existing resources optimally so that that a

responsible and beneficial balance can be achieved over the longer term. Within a

business context, economic sustainability involves using the assorted assets of the

company efficiently to allow it to continue functioning profitability over time.

Sources:

http://www.sustainable.org/economy

https://hbr.org/2011/10/the-sustainable-economy

http://www.thwink.org/sustain/glossary/EconomicSustainability.htm

2- What are economic sectors?

3- Who contributes to economic activity?

1. PEOPLE: dual function: workers and consumers.

1. COMPANIES: produce goods and services for a profit. They need people

and other companies. There are different types of company (depending on

their size or their ownership).

1. THE STATE: economic functions (depending on the country).

4- What makes production possible?

1. NATURAL RESOURCES: renewable or non-renewable resources are

necessary to make production possible.

1. CAPITAL: physical, human and financial capital are needed as well.

1. TECHNOLOGY: depending on the use of manual, mechanical or automated

methods, the production and profits can vary.

1. KNOWLEDGE AND KNOW-HOW: to achieve a competitive economy.

1. WORK: both, physical and intellectual. Productivity is essential.

5- Population and workWe need to distinguish economically active and inactive population.

How is the labour market organised?

There are different types of paid employment:

● Most people work for an employer in exchange for wages.

● Some workers form cooperatives, they share profits.

● Self-employed workers work for themselves.

Employers and employees formalize working conditions in the contract.

National laws regarding employment contracts should be obeyed.

Labour relations. employers and unions.

Collective bargaining is a

process of negotiations between

employers and a group of

employees aimed at reaching

agreements to regulate working

conditions. The interests of the

employees are commonly

presented by representatives of

a trade union to which the

employees belong.

The unemployment problem

Underground economy

The underground economy is business activity that is unreported or underreported

for tax purposes. It can be particularly widespread in industry sectors where cash

transactions are common, such as retail, hospitality, and construction, including

home renovations…..just to name a few.

6- How are economic activities organized?

The economic activities are the set of activities carried out by human

beings to satisfy their needs.

An economic system is an an organized way in which a state or nation

allocates its resources and distributes goods and services in the national

community.

There are three main economic systems:

SUBSISTENCE

COMMUNISM

CAPITALISM

Subsistence system

A subsistence economy is a non-monetary economy which relies on natural

resources to provide for basic needs, through hunting, gathering, and

subsistence agriculture. "Subsistence" means supporting oneself at a minimum

level; in a subsistence economy, economic surplus is minimal and only used to

trade for basic goods, and there is no industrialization.

Communist system

A system of government in which the state plans and controls the economy and

a single, often authoritarian party holds power, claiming to make progress toward

a higher social order in which all goods are equally shared by the people.

Capitalist systemCapitalism is an economic system in which trade, industry, and the means of

production are largely privately owned and operated for profit.

Central characteristics of capitalism include capital accumulation,competitive

markets and wage labour.

In a capitalist economy, the parties to a transaction typically determine the prices

at which assets, goods, and services are exchanged.

Monopoly

A situation in which a single company or group owns all or nearly all of the

market for a given type of product or service. By definition, monopoly is

characterized by an absence of competition, which often results in high prices

and inferior products.

Oligopoly

A situation in which a particular market is controlled by a small group of firms.

An oligopoly is much like a monopoly, in which only one company exerts control

over most of a market. In an oligopoly, there are at least two firms controlling the

market.

Consumer protection is a group of laws and organizations designed to ensure

the rights of consumers as well as fair trade, competition and accurate

information in the marketplace. The laws are designed to prevent businesses

that engage in fraud or specified unfair practices from gaining an advantage over

competitors.