Unit 2 The economic organization of society

By Ángel Ramos

Natural resources and raw material• Overexploitation

Capital

Physical capital

Financial capital

Human capital

Types of production

Economic agents

The circular flow of income

Economic sectors• Primary sector– Produce food for consumption and raw material for

industry– Agriculture, livestock farming, fishing, forestry,

mining. – In wealthy countries is the smallest sector.

• Secondary sector– Transform raw material into manufactures products.– Industry, construction, exploitation of energy

sources.– In developed economies this sector has more rate of

employment than primary sector, but far away from the tertiary.

• Tertiary sector– Provides services to the population or to companies.– Healthcare, education, transport, trade, culture…– Is the main sector in developed countries and the

fastest growing in the world.– Includes a lower-end tertiary sector of poorly paid

jobs: cleaners, fast food workers, street vendors…

• Quaternary sector– Based on activities related to creation, distribution

of information, research and investigation…– Workers need special training and high level of

expertise.

The economy of the European Union• The EU is a single market of 28 countries.• It’s GDP accounts for the 30% of the world’s total.• The most important economies in the EU are Germany,

France and the UK. These countries are include among the most advanced economies in the world.

The EU and the economic crisis

• The recession that began in 2007 has weakened the economy of the EU.

• Consecuences:– Weak economic growth.– Very low inflation: cosecuence of the recession. – Growth of the unemployment rate in some countries.– Massive public debt.

• Nowadays the EU faces the challenge of leaving the economic crisis.

• From 2015 a combination of favorable factors have begun to benefit some european economies:– The oil prices remain relatively low: estimulate the

production.– The depreciation of the Euro against the dollar

favoured exports. But reduced imports

THE EMU • The Economic and Monetary Union is the integration of 19 countries of the EU into a common

market that uses a single curency: The Euro.

• The main authority of the EMU is the European Central Bank (ECB) with the headquater in Frankfurt (Germany) its current president is Mario Draghi.

• The function of the ECB is to set the monetary policies of the Eurozone and to keep the inflation under control.

Economic future of the UE

• How is Spain responding the crisis?• Do you consider that the EU has already

overcome the crisis?• How is the EU responding the crisis? (Ex. D)

Case of study: The TTIP

Economic crisis• Are the following statements true or false? Correct the false ones.

– In the capitalist system a period of growth is followed by a period of stability, then another period of growth.

– We can classify crisis according to their severity: depression, recession or downturn.

– A drop in consumption forces companies to increase production and hire more employees.

– In our economic system it is possible to avoid the cyclical fluctuations of the economy.

– International economic and political institutions employ professionals to introduce measures that will soften the effects of crisis.

Read and analyse graphs and diagrams• Observation:

– What kind of diagram is it: Graph, bar chart, map…– What information is represented in the diagrams?– Where has the information come from?

• Description:– How is the information represented? Describe what can you see: axes/sections, colours and its

meanings, different numbers…– What is trying to highlight the source?

• Analysis:– Describe the information represented: Highest figures, lowest figures, make comparisons between

different periods and data.• Conclusion:

– Your opinion about this figures, possible solutions.