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The economy: fundamentals

1.8.2018, , Zdroj: Verlag Dashöfer

The economy: fundamentals

Edward Thomas


Look at the following vocabulary. Can you match the terms with the definitions given?

1) Economics A) Things that are made, presented or constructed to have valued added.
2) The economy B) Transportation, medical services, education, sales, marketing- the economic stage where skills and relationships are more important than things.
3) Primary sector C) Actions that give benefits to customers which pay for them.
4) Secondary sector D) An economy where competition is free among market participants.
5) Tertiary sector E) An economy with some free areas but also some areas controlled and managed by Government.
6) Goods F) The system of economic relationships which exists in a defined space.
7) Services G) Working on the image of a service or product to make it more attractive and to develop relationships between companies and customers.
8) Free market economy H) Taking basic materials and making more complex physical products with a payment for the value added.
9) Mixed economy I) The connecting process between cutomer and company where the good or product is paid for by the customer.
10) Planned economy J) Computer-led systems which manage and organise information.
11) Sales K) The social science which studies how the market works.
12) Marketing L) Agriculture and mining- the industry of the basic materials which drive everything else.
13) Manufacturing M) An economy where government has control of most of the activities.
14) Information technology N) The economic stage where basic materials are turned into more developed or complex ones.

Correct answers are here1


„Underlying most arguments against the free market is a lack of belief in freedom itself.”- Milton Friedman

Most countries today use some kind of mixed economy, where the Government limits some of the activities of the free market and provides some services outside the free market. But there are also some international limits l - like trade barriers.

Look at the questions 1-5 below. Match them with the answers A-E (answers on page below)

1) What are trade barriers?

2) Why do trade barriers exist?

3) What are the negative effects of trade barriers?

4) What does the term ”developing countries“ mean?

5) What are the economic and social problems of developing countries which prevent development?

A) Trade barriers are one of the big ones! Another is debt- when a country's Government borrows a lot of money from other countries and uses money from taxation to pay the interest on the debt instead of using it for services the people need. Other problems include low levels of education and lack of infrastructure like roads and railways.

B) The negative effects are clear: according to the UN Millenium goals, „Lower trade barriers would bring hundreds of billions of dollars in extra income- spread across all nations, but benefitting especially the developing countries”. It is not just the money, either, there is also the fact that infrastructure is not developed locally in the developing nations. This often leads to migration, which is a problem for developed countries to deal with too.

C) It is a term to describe countries whose economies have not fully developed according to the standards which allow for the education, leisure and health of their people. Many are in South America and Africa. Most of their economic activities are part of the primary sector- for example mining and especially agriculture, rather than in ”valued-added“ production or services.

D) All kinds of things, including taxes on foreign goods, regulations that make it harder for imports to enter an economic market, and artificial support for industry or agriculture, which are called subsidies. There are also natural barriers, like seas, mountains and deserts.

E) Generally they protect the manufacturers or service providers of a country or a group of countries from the cheaper or more effective competitors of in other countries. Such a way of helping companies is known as protectionism, but some people say they don´t really ”protect“ anyone.

Correct answers are here2


Match the words with the definitions:

1) Manufacturing plant A) Money paid to governments by all citizens from their wages/salaries or from the things they buy.
2) Mining B) The idea of building economic walls or barriers to stop foreign competitors from taking local business
3) Tax / taxation C) Money (from taxation) that a government has extra to the amount that it spends on public services.
4) Farming D) All kinds of mechanisms which prevent free trade- for example laws, regulations, subsidies and taxes.
5) Regulation E) Getting basic materials from the ground, for example coal, oil, iron ore, bauxite, diamonds.