Economy
1. Summarization
***What is Economy
Economy refers to the ways people use their environment to meet their material needs. It includes the production, exchange, distribution, and consumption of goods and services of that area. A given economy is the end result of a process that involves its technological evolution, history and social organization, as well as its geography, natural resource endowment, and ecology, among other factors.
***History of Economy
As long as someone has been making and distributing goods or services, there has been some sort of economy; economies grew larger as societies grew and became more complex. The ancient economy was mainly based on subsistence farming. The Lydians were the first people to introduce the use of gold and silver coin. It is thought that these first stamped coins were made around 650-600 BC.
For most people the exchange of goods occurred through social relationships. There were also traders who bartered in the marketplaces. The Babylonians and their city state neighbors developed economic ideas comparable to those employed today. They developed the first known codified legal and administrative systems, complete with courts, jails, and government records.
Several centuries after the invention of cuneiform, the use of writing expanded beyond debt/payment certificates and inventory lists to be applied for the first time, about 2600 BC, to messages and mail delivery, history, legend, mathematics, and astronomical records.
In Medieval times, what we now call economy was not far from the subsistence level. Most exchange occurred within social groups. On top of this, the great conquerors raised venture capital to finance their land captures. The capital investment would be returned to the investor when goods from the newly discovered or captured lands were returned by the conquerors.
The first economist in the true meaning of the word was the Scotsman Adam Smith (1723-1790). He defined the elements of a national economy: products are offered at a natural price generated by the use of competition - supply and demand - and the division of labour. He maintained that the basic motive for free trade is human self interest. In Europe, capitalism started to replace the system of mercantilism and led to economic growth. The period today is called the industrial revolution because the system of production and division of labour enabled the mass production of goods.
***What is Capitalism?
Capitalism is an economic and social system in which capital and the non-labor factors of production or the means of production are privately controlled; labor, goods and capital are traded in markets; profits are taken by owners or invested in technologies and industries; and wages are paid to labor.
Capitalism as a system developed from the 16th century on in Europe, although capitalist-like organizations existed in the ancient world, and early aspects of merchant capitalism flourished during the Late Middle Ages. Capitalism gradually spread throughout Europe and other parts of the world. In the 19th and 20th centuries, it provided the main means of industrialization throughout much of the world.
***How Capitalism Works
The economics of capitalism developed out of the interactions of the following five items
1. Commodities: There are two types of commodities: capital goods and consumer goods. Capital goods are products not produced for immediate consumption but serve as the raw materials for consumer goods to be sold to others.
2. Money: Money is primarily a standardized means of exchange which serves to reduce all goods and commodities to a standard value. It eliminates the cumbersome system of barter by separating the transactions involved in the exchange of products, thus greatly facilitating specialization and trade through encouraging the exchange of commodities.
3. Labour power: Labour includes all mental and physical human resources, including entrepreneurial capacity and management skills, which are needed to transform one type of commodity into another.
4. Means of production: All manufacturing aids to production such as tools, machinery, and buildings.
5. Production: The act of making goods or services through the combination of labour power and means of production.
***Economic Measures
1. GDP
The Gross Domestic Product or GDP of a country is a measure of the size of its economy. While often useful, it should be noted that GDP only includes economic activity for which money is exchanged.
2. The Gini coefficient
(also known as the Gini index or Gini ratio) is a measure of statistical dispersion intended to represent the income distribution of a nation's residents. The Gini coefficient measures the inequality among values of a frequency distribution. A Gini coefficient of zero expresses perfect equality, where all values are the same (for example, where everyone has the same income). A Gini coefficient of one (or 100%) expresses maximal inequality among values (for example where only one person has all the income).
2. new, interesting, items
Euro Bill
***What is Euro?
Euro is a single currency which will be used in 12 countries of EMU(European Economic and Monetary Union) from 2002.1.1. including cash.
***countries which use Euro
Euro can be used in 12 countries in the world. Germany, Austria, Belgium, Spain, France, Italia, Dutch so on.. and Greece will join Eu in 2002
***Sort of Euro
There are 1, 2, 5, 10, 20, 50cent and 1Euro 2Euro coins, so it is totally 8 sort of coins. Bill is 7 sort, 5, 10, 20, 50, 100, 200, 500Euro bill.
***Meaning of Design of Euro
Windows in bill means ‘Open heart of Europe’ and bridge in bill means communication and relationship between global people and Europe.
3. Discussion
Q) Is Capitalism really the best economy system? If not, what can be alternative system?
After fall down of Communism, Capitalism rised. There is difference and discrimination to people from their birth. People have different economic level, education level and appearences when they are born. So, regardless of effort of Communism, there is natural difference and discrimination between people. Therefore, we now have Capitalism system. By unlimited competing, we can gain our own profits. But there are many problems in Capitalism. People's right and dignity is looked down and gap between rich and poor is getting more serious. So I wonder Capitalism is the best economic system in our modern society.
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