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Economics as a social science, its subject matters

US economy

1. Features of US economy: it’s seemed to be rather complicated, but it has some certain features which are easily identifiable:

1) Freedom in economic decision-making for individual and corporation;

2) Low levels of taxation, regulation and government involvement;

3) Court system protests property rights and enforces contracts;

4) Large population, large land area, numerous natural resources, highly developed system of secondary education.

2. Natural resources: the US is rich in them: fertile farm soil and it has a moderate climate. Also there’re extensive coastlines on the Pacific and The Atlantic oceans. Rivers flow from far within the continent. The Great Lakes provide shipping access. These waterways helped bind American 50 individual states in a single unit.

3. Labour: the number of available workers and their productivity are very important to the US. Steady growth in the labor has heped fuel economic axpansion. There’re lots immigrants from Europe, Asia and etc. The promise of hih wages brings people all over the world.

4. Manufacturing and investment: corporation – an association of workers (stockholders). They form a business enterprise with set of rules and customs. By investing capital banks shaped US economy. Now investors has influence all over the world.

5. Monetary policy is directed by the nation’s central bank (Federal Reserve Board). Us economy maintain a high GDP, low unemployment rate and it’s still attractive to immigrants.

UK economy

1. Location: The UK is a country to the north-west of mainland Europe. It’s a parliamentary democracy and a constitutional monarchy. 4 countries: 1) England, 2) Wales, 3) Scotland and 4) Northern Ireland. Also it has 14 overseas territories – remnants of British Empire.

2. Industrial revolution and its outcome: The UK began ind revolution. Starting it, the UK concentrated on heavy industries: shipbuilding, coalmining. Overseas markets for products allow to dominate in international trade. It was the world’s foremost power during the 19-20th, but 2 worlds wars à diminishing leading role and status on global affairs.

3. Nowadays: The UK retain economic, cultural, political influence. It holds a seat on the United Nation Security Council, NATO, G8.

4. London – is the center of international business. It’s the leader of the 3 “command centers” (NY, Tokyo). Since 1980s – Anglo-Saxon model – principles of liberalization, the free market, low taxation. UK – 5th large economy.

5. Sectors:

1) Service sector now makes up 70% GDP. It’s dominated by financial services;

2) Multinational companies that aren’t UK-based have headquarters in London. There are the largest concentration of foreign banks branches;

3) Tourism: 27 mln tourists/year. 6th place in the world by tourist destination;

4) Agriculture accounts only for 1% of GDP.

6. The currency – pound sterling. The UK chose not to join the Euro in 2005. Chancellor of the Exchequer exercised government involvement. It controls HM Treasury.



3. Money: barter, forms, functions and qualities of money

It influences on everyone. We learn it at a very early age and money concerns as all very closely.

Nowadays we buy bread, clothes with money in a shop: we exchange our money for goods which others sell to us. Today we travel by bus, pay the charge or fee: we exchange our money for services which others sell to us.

Primitive community: people obtain goods and services by barter. It’s the earliest form of trade, people offer goods in exchange for other goods. There’s a problem of “double coincidence of wants” or the problem of the “rate of exchange”. (When one wants one thing, another doesn’t want the thing he’s supplying to him)

In advanced societies people realized: they need some commodity the could use in exchange for anything, that doesn’t decay, with help of which people could measure the value of one thing against of another. Such commodity is money.

Functions: 1) a medium of exchange; 2) a store of wealth; 3) a measure of value.

Forms: banknotes, coins, cash.

Units of money must have certain qualities:

1) Standard - all of the same kind, look and weight the same (shape, size);

2) Durable – strong and long-lasting;

3) Scarce – they must be difficult to come;

4) Acceptable – they m.b. accepted as a medium of exchange in a society or country for buying and selling;

5) Divisible – m.b. possible to divide large units of money to a smaller one;

6) Portable - m.b. easy to carry

Economics as a social science, its subject matters

The term “economics” comes from the Greek: oikois means ‘house’, nomos – ‘law’. So it’s the rules of household.

It’s a social science, ‘cause it’s the study of how society decides 3 basic problems: what, how and whom to produce goods and services.

The goods are physical commodities, such as computers, cars, cherries. The services are activities such as live theater performance (it can be enjoyed only at the instant moment it is produced).

The subject matter of economics is explaining human behavior. The central problem – how to reconcile the conflict between limitless desires for goods and the scarcity of resources. In answering 3 basic questions, economics explain how resources are allocated.

Economists aim to develop theories of human behavior and test them against the facts.

5. Economy: economic agents, factors of production, scarcity of resources

There’re 3 types of economic agents in the modern market economy: consumers, producers and the government. The main goal of the economy is to produce goods and services for the satisfaction of the needs of consumers.

Consumers are usually households, they provide labour and other factors of production. For that they have income, which they use to purchase smth.

Producers are usually enterprises or firms; they acquire factors of production (labour, land, capital) from households and use them to produce outputs.

Government is a producer, a consumer, and a regulator of economic activity.

The economic agents are engaged in a complex web of transactions. Because of the scarcity of resources the volume of goods that can be produced is limited. That means that:

1) the utilization of resources is to be efficient.

2) economic agents are to make compromises between alternative uses.

So we are to do rational decisions over available resources (to draw maximum profit from given resources and to obtain desired results with the minimum cost).


Date: 2015-12-17; view: 735


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