The economy: fundamentals
1. THE BASICS
Look at the following vocabulary. Can you match the terms with the definitions given?
Correct answers are here
2. WALLS BETWEEN US
„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 here
3. ECONOMIC TERMS IN A LITTLE MORE DETAIL
Match the words with the definitions: