The Economy

Revision notes on the economy.

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  • Created on: 29-04-12 15:13
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9.The Global Village: The Economy
1. Economy This is made up of all the organisations that provide goods
and services and all the individuals and organisations that
buy them.
2. Consumers A person who buys goods and services for their own needs;
for example some one who buys a CD from a shop or
someone who pays for their lawn to be mowed.
3. Producers People or organisations that help make products or provide
services; for example a full time teacher or a part time
sales secretary for staff.
4. Globalisation The process that links countries around the world through
trade and migration. This process leads to a more
interdependent world. Faster communication and
transportation enables globalisation to increase.
5. Fair trade A system of trade that benefits the producers in LEDCs.
Fair trade guarantees farmers a decent price for their
goods, health and safety conditions and environmental
6. Free trade Trade between countries which is not restricted by things
like high taxes on imports. The price of goods is determined
solely by the market.
The economy is made up of consumers, producers and citizens. The value of an economy is the
sum of all that is produced (or consumed) in a year. The economy is split into the public (owned
by the government) and private (owned by private individuals and companies) sectors. The
economy consists of 4 sectors: primary (getting resources from the land), secondary
(manufacturing), tertiary (services like tourism and banking) and quaternary (research). In the
last century the tertiary sector has grown at the expense of jobs in the primary and secondary

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Economic Concepts
Meaning Example
Competition Businesses battle with McDonalds and Burger King.
other businesses to sell Microsoft and Apple.
products or provide Tesco and Morrison's.
services. They compete on
price and service quality.
Supply (what is If people buy less of a There are lots of mobile phone
produced) and product then less will be shops opening due to the
demand (the produced. If people buy popularity of mobile phones.…read more

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The Global Economy
You need to know what is meant by global inequality and how this can be affected
by trading practices, the impact of multinational companies and aid programmes.
LEDC Less Economically Developed Country
MEDC More Economically Developed Country
Ethical business Business that behaves responsibly towards the
environment and workers and producers. E.g.
Business that respects human rights, e.g. fairtrade
clothes companies or the Body Shop.
Ethical shopping Choosing to buy products that are ethical ­ e.g.
environmentally friendly products, or fair trade
products.…read more

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Advantages of globalisation Criticism
Companies are able to produce Multinational companies are very difficult to
goods anywhere in the world from control and regulate because they operate in more
materials from anywhere, so they than one country. Smaller businesses can not
can look for the best deal. compete.
Trade between countries has Multinational companies' profits normally end up in
increased the rich countries where their head offices and
directors are based, and not in poorer countries
where their goods are produced.…read more

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What is fair-trade?
Fairtrade is a trading scheme that was set up in the 1990s to try to improve the situation for
small farmers in LEDCs. The problem was that big companies had forced down the prices paid
to small producers for food products such as coffee, cocoa and bananas. As a result, farmers
were left without enough money to pay for decent housing, education and healthcare.…read more


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