THE ECONOMY

UNIT 4
 VOCABULARY
GLOBALIZATION SUBSISTENCE SYSTEM
CAPITAL CAPITALISM
ECONOMIC ACTIVITIES MONOPOLY
LABOUR UNIONS OLIGOPOLY
ACTIVE POPULATION RESOURCES

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38 KEY
LANGUAGE
 ECONOMIC ACTIVITIES

They are all the

processes used to
CAN BE GROUPED INTO 3
obtain the GOODS SECTORS
and SERVICES that
people need.

PRIMARY SECONDARY TERTIARY

To collect or Transform raw

Provides services
produced natural materials into
to people
resources from finished or
the environment manufactured
products
READ PAGE
39. Make a QUATERNARY
high tech
diagram in
your notebook
 Phases of economic activity

PRODUCTION
All the goods and services created as a It changes over time: own produced
result of an economic activity factories

DISTRIBUTION

Moving goods from the place of production to the consumer

CONSUMPTION
All the goods and services that people buy to satisfy their wants and needs

READ HISTORY F PAYMENT

Exercises: 1-2 page 39.
 1- Barter: direct 2- Natural coins:
3- Metal coins
exchange of goods. valuable natural items.

6- Plastic and 5- Bills of exchange or

4- Paper money
electronic money cheques.

7- New technologies
and online payment. HISTORY OF PAYMENT
 The use of various strategies for employing
existing resources optimally so that that a SUSTAINABLE
responsible and beneficial balance can be ECONOMY
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.

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 SECTORS
There are three main types of industry in which firms
operate. These sectors form a chain of production which
provides customers with finished goods or services.

Primary production: Secondary production: Tertiary production:

this involves acquiring this is the manufacturing this refers to the

raw materials. and assembly process.
For example, metals and It involves converting
coal have to be mined, raw materials into
oil drilled from the components, for
ground, rubber tapped example, making plastics
from trees, foodstuffs from oil.
farmed and fish trawled. It also involves
This is sometimes known assembling the product,
as extractive production. eg building houses,
bridges and roads.
commercial services that
support the production
and distribution process,
eg insurance, transport,
advertising, warehousing
and other services such
as teaching and health
care.
 What are economic sectors?
Economic activities are classified into three main
sectors: primary, secondary and tertiary.
The primary sector:
It includes the activities based on the extraction of goods and
resources from the environment: agriculture, stock breeding,
hunting, forestry, fishing and mining.
Primary activities are carried out in rural, marine and forest areas,
which are usually far from the cities.
The secondary sector:
It includes the economic activities which transform the goods and
resources extracted from the environment (raw materials) into
processed products.
Construction and industry are the main activities in this sector.
Industries are usually located in cities and nearby areas.
 What are economic sectors?
The tertiary sector:
It includes activities which provide services of all kind:
trade, transport, tourism, health, communication,
education, finance or culture.
The quaternary sector is due to the rapid
expansion of the tertiary sector.
It includes several service activities characterized by a
high level of specialisation, such as management,
decision-making, high research or the new
technologies.
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 ECONOMIC AGENTS

People who take part in economic activities

PRODUCE
ECONOMIC
THEY DISTRIBUTE
GOODS
CONSUME

WORKERS
PEOPLE
CONSUMERS PRIVATE AGENTS

THEY ARE COMPANIES

THE STATE PUBLIC AGENTS

 FUNCTIONS OF
ECONOMIC AGENTS They work/provide/supply
the companies with their
PRODUCERS resources: LABOUR in
exchange of payment =
WAGE/SALARY
PEOPLE DUAL FUNCTION

Buy good and

CONSUMERS
services

They are production units that produce goods

and services to obtain PROFIT.
COMPANIES
They employ people in exchange of salary

Establish rules and economic laws

Create companies in risky sectors

THE STATE
Creates jobs

Provides public services

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 Small 0-50 workers

Size Medium 51 500 workers

COMPANIESclassification by Large more than 501

Stated-owned
Ownership Sole proprietorships
Privately owned
Limited companies
 What makes production possible?
NATURAL RESOURCES

renewable or non-renewable resources

are necessary to make production
possible.

CAPITAL

Physical
human
financial capital

TECHNOLOGY

manual
mechanical
automated methods

KNOWLEDGE AND KNOW-HOW

to achieve a competitive economy.

WORK

Productivity
 RENEWABLE Can be replenished
NATURAL
RESOURCES They could disappear
NON-RENEWABLE
Are limited
 CAPITAL

All the resources used to TYPES

produce goods and services

PHYSICAL HUMAN FINANCIAL

CAPITAL CAPITAL CAPITAL

Tangible assets: Workers knowledge, Money to invest or t

buildings, machines, experience and start a business
equipment training activity.
 Page 43. ex: 2 TECHNOLOGY

TYPES It helps companies to

MANUAL MECHANICAL AUTOMATED Create new

Increase
goods and
PRODUCTION To save on
profitable
and labour costs
methods of
PRODUCTIVITY
production

Production is the process of

creating, growing, manufacturing,
or improving goods and services. It
also refers to the quantity
produced.
Productivity is used to measure the
efficiency or rate of production.
It is the amount of output (e.g.
number of goods produced) per unit
of input (e.g. labor, equipment,
and capital).
 POPULATION AND WORK

We need to distinguish

ECONOMICALLY ACTIVE ECONOMICALLY INACTIVE

POPULATION POPULATION.

They work (or

are willing to
People over
work) to THEY CAN BE
16 years old
produce goods
and services

EMPLOYED UNEMPLOYED

They are
looking for a http://www.ine.es
job
/infografias/tasase
pa/desktop/index.
html?lang=es
POPULATION AND WORK
 HOW IS THE LABOUR MARKET ORGANIZED?

Most people work for an employer in

There are exchange for wages.
different types Some workers form cooperatives, they share
of paid profits.
employment:
Self-employed workers work for themselves.

CONTRACT
It is an agreement between employers and employees. It
formalizes working conditions.
Labour conditions.
Wages, duration, vacations
THE STATE
It creates rules and laws regarding employment contracts
should be obeyed.
Labour relations. employers and unions.

Relation between EMPLOYERS and EMPLOYEES is based on

COLLECTIVE BARGAINING (convenios colectivos)
They are the result of several negotiations between businesses and
workers, and usually they are supervised by government.

The management
CONFEDERATIONS OF
EMPLOYERS
Workers LABOUR
UNIONS

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VIDEO
THE UNEMPLOYMENT PROBLEM
VIDEO
NEGATIVE EFFECTS OF UNEMPLOYMENT
GOVERNMENT
CONSUMPTION TAX COLLECTION
SPENDING
DECREASES DECREASES
INCREASES

SOCIAL
UNDERGROUND
BEHAVIOR
ECONOMY
CHANGE
 The UNDERGROUND ECONOMY (economa sumergida) 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 and so on.

Gross domestic product (GDP) is the

monetary value of all the finished goods
and services produced within a
country's borders in a specific time
period. (In Spain we call it IPC Indice de
precios al consumo)

Page 49. READ

HOW ARE ECONOMIC ACTIVITIES
ORGANIZED?

ECONOMIC SYSTEM

Reflects how state organized 3 main types of

the Economic Activities. economic systems:

Production Distribution SUBSISTENCE

Consumption COMMUNISM

CAPITALISM
 Subsistence system
Families produce enough to meet their basic needs.
It is found in LEDCs and in past societies (for instance
Europe until industrial revolution)
Barter (non-monetary economy)
Subsistence system
 Communist system

Centrally-planned system
State plans and controls the
economy
 Capitalist system
Free market.
Trade, industry, and the means of
production are largely privately owned and
operated for profit.
Characteristics:
PRIVATE OWNERSHIP
PROFIT the objective of economy
SUPPLY AND DEMAND regulates by PRICE
FREE COMPETITION
 A company controls the productiona
and sale of a product.

MONOPOLY

Absence of competition high prices.

FREE COMPETITION is
broken in some cases
A situation in which a particular market
is controlled by a small group of firms.

OLIGOPOLY

A few companies control over most of a

market.

Governments in capitalists states intervene in economy

CONSUMER RIGHTS
HEALTH AND SAFETY PROTECTION
PROTECTION AND ECONOMIC
INTERESTS
INFORMATION
REPRESENTATION

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