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European Economy
Economic systems of UK, Germany, &
Russia
Goods and Services
• A good is something that you can use or
consume, like food or CDs or books or a car or
clothes. You buy a good with the idea that you
will use it, either just once or over and over
again.
• A service is something that someone does for
you, like give you a haircut or fix you dinner or
even teach you social studies. You don't really
get something solid, like a book or a CD, but
you do get something that you need.
Natural Resources are
• “Gifts of nature” that can be used to produce
goods and services; for example, oceans, air,
mineral deposits, virgin forests and actual
fields of land. When investments are made to
improve fields of land or other natural
resources, those resources become, in part,
capital resources. Also known as land.
What are Capital Goods?
• Raw materials used to produce finished
products
• "Capital goods" are those that are used to
produce other goods, like machine tools.
• "Consumer goods" are finished products that
are ready for use as they are.
What is the difference between
Human and Investment Capital?
• Human Capital
– Human capital is the collection of capabilities of
the individuals required to provide solutions to
customers.
– Human capital is (worth) more important than
financial capital.
What is the difference between
Human and Investment Capital?
• Investment Capital
– Refers to money used by a business to purchase
fixed assets, such as land, machinery, or buildings.
Imports Vs. Exports
• Imports Goods and services bought from
sellers in another nation.
• Exports Goods and services produced in one
nation and sold in other nations.
Export
Import
Trade
• The value of a country's total exports minus
the value of its total imports. It is used to
calculate a country's aggregate expenditures,
or GDP, in an open economy.
North American Free Trade Agreement
(NAFTA)
• The Trans-Pacific Partnership brings NAFTA
into the 21st Century for the benefit of
working families in America. TPP will help the
U.S. address environmental challenges like
wildlife trafficking and illegal fishing, respond
to new developments in global trade, such as
the growth of the digital economy, and
reinforce the U.S. commitment to upholding
cutting-edge labor and environmental
standards to level the playing field for US
workers.
NAFTA
• For services and many categories of goods,
the United States maintains a trade surplus
with the NAFTA countries. The largest factor
affecting the trade balance with NAFTA
countries is the importation of fossil fuels and
their byproducts. If those products are
excluded, there is no deficit. In fact, the
United States has a large and growing trade
surplus in goods, including agriculture and
manufactured goods, as well as in services.
European Union
• The EU is a unique economic and political
partnership between 28 European countries
that together cover much of the continent.
• The result was the European Economic
Community (EEC), created in 1958, and
initially increasing economic cooperation
between six countries: Belgium, Germany,
France, Italy, Luxembourg and the
Netherlands. Since then, a huge single market
has been created and continues to develop
towards its full potential.
European Union
• The EU is based on the rule of law: everything
that it does is founded on treaties, voluntarily
and democratically agreed by all member
countries. These binding agreements set out
the EU's goals in its many areas of activity.
• The EU is the world’s biggest trader,
accounting for 16.5% of the world's imports
and exports. Free trade among its members
was one of the EU's founding principles, and it
is committed to liberalizing world trade as
well.
Tariffs and Quota
• Tariffs and quantative restrictions (commonly
known as import quotas) both serve the
purpose of controlling the number of foreign
products that can enter the domestic market.
Barrier and Embargo
• A Barrier is anything that restrains or
obstructs progress, access, etc.
– A trade barrier.
• A Embargo is an injunction from a
government commerce/agency to refuse
freight for shipment, as in case of congestion
or insufficient facilities.
– a restraint or hindrance; prohibition.
Specialization
• An arrangement within an alliance wherein a
member or group of members most suited by
virtue of technical skills, location, or other
qualifications assume(s) greater responsibility
for a specific task or significant portion thereof
for one or more other members.
Exchange Rate
• Relationship of the value of one country’s
currency expressed in terms of the value of
another country’s currency.
Euro
Dollar
Gross Domestic Product (GDP)
• The total market value of all the goods and
services produced within the borders of a
nation during a specified period.
Economic Vocabulary words
• Barter-Trading a good or service directly for
another good or service, without using money or
credit
• Competition-Attempts by two or more individuals
or organizations to acquire the same goods,
services, or productive and financial resources.
Consumers compete with other consumers for
goods and services. Producers compete with
other producers for sales to consumers.
Market Economy (Cont.)
• People in market economies are seldom
dependent on others as are the
Inuits. However they are interdependent
because they need others to provide the
goods and services they themselves do not
produce because of high opportunity costs.