Activity No.

2: THE CONTEMPORARY WORLD

Name:__________________________________________

Date: ________________ Course: ____________ Class Schedule:____________

Answer the following questions.

1.) What is present in a global economy?

The global economy is the economy of all humans of the world, referring to the global economic system,
which includes all economic activities which are conducted both within and between nations, including
production, consumption, economic management, work in general, exchange of financial values and
trade of goods and services. Traditional economies, command economies, mixed economies, and
market economies are the four primary types of economic systems.

2.) What are the advantages and disadvantages of a global world system?

The development of the global world system has improved services for people everywhere and
raised GDP rates. It increases country output, productivity, job creation, wage growth, and
lowers product prices in the global economy. The reduction in product quality brought on by
outsourcing and the competition local enterprises must contend with are two drawbacks of the
global economic system. Due to its demand for lower-paid, higher-skilled labor, the global world
system can likewise raise the unemployment rate.

3.) What are the roles of international financial institutions in the creation of a global economy?
The administration of finances in a global business context, or international financial
management or international finance, entails trading and making money through the exchange
of different currencies. IFIs (International Finance Institutions) play a vital role in assisting the
private sector in developing nations by funding programs that foster sustainable growth in these
nations. It keeps the equilibrium between international organizations intact and aids in
understanding their fundamentals. The peace between the nations is maintained via an
international financial system. Without a reliable financial system, every country would pursue
its own interests.

4.) Is there a need for markets to be integrated? Yes or no. Why?

Yes, there is a need for market integration because it offers a lot of social benefits, such as
expanding consumer choice in terms of financial services and investment prospects as well as
competition among service providers. More specifically, economic integration often results in
lower trade costs, better access to and a wider variety of goods and services, as well as
efficiency advantages that increase purchasing power. We know from economic theory and
 global experience that tiny countries benefit economically by being fully integrated into the
world economy. Access to a broader consumer base, a larger pool of skilled workers, more
sources of funding, and new technology can all be made easier through economic integration.

5.) How can market integration facilitate globalization?

Financial journals note that there is a significant correlation between economic globalization and
financial market integration, and that stock markets are becoming more integrated.
Theoretically, global financial integration implies that all markets have the same risk-adjusted
return. Market integration has a number of positive societal effects, including enhancing
competition in the financial services industry and expanding the range of investment choices
and financial services available to consumers. It supports the development of research and
technology, economic changes that are focused on the market, and contributions from
international firms.

6.) Why are global corporations name such as part of the buyers and producers?
A sizable portion of global employment, investment, and research is accounted for by global
corporations. Some view them as evil monopolizers who take advantage of workers and evade
taxes. Others see them as generators of efficiency and invention that add to the prosperity of
the entire world. They have the highest worker productivity and earnings, the highest
production taxes, and the largest emissions. They also make significant physical investments.
Banks, insurance businesses, and real estate firms all act as financiers.