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.

Dollar

Euro

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.