Economic Activity

By Diego Vilar Toledano

Book pages
What is the Economic activity?

is what is carried
out by humans in
order to acquire
goods (products
and services) to
satisfy consumer
needs
The economic goods
def. are products and services generated by the economic activity

goods obtained activities

directly from carried out by Classification:
nature or which humans to
are turned into benefit society Function: consumable or capital goods.
something
Composition: intermediate goods or
finished goods.

Ownerships: private or public.

Goods not related to economy

Economics
Economic Agents
def. those elements that have a role in converting the
factors of productions into goods and services

Companies: they
don't consume goods
and services they
generate: they sell
them for profit and in
exchange of money

People and family: private

The state: offers services, is
economic agents (consumers).
financed by taxes and
They generate and consume
establish laws
goods and services to satisfy
their needs.
Factors of production
def. are the resources necessary for the generation of economic goods
Raw materials “provided by
nature”
Renewable resources
Non renewable resources
Partial renewable resources
Human resources:
People who by virtue of their
labour convert natural
resources into consumer
goods.
Capital:
material and financial
resources.
Human resources:
Combination of Knowledge
and techniques used in
economic activities.
The Economic Sector
def. Sectors in which economic activities are grouped, there
are three:
Tertiary: activities that
Primary: obtain resources provide services.
directly from raw materials Secondary: convert raw
oldest economic activity materials into manufactured
products or infrastructure
 The Economic Cycle
Expansion Stagnation Recession Depresion

Production
decreases
Investments in unemployment
Stable economy
companies and increases
tend to recesion
generation of profits start of a economic
and savings crisis
Economics indicators.
data used to establish which phase an
economy is in a specific time
Employment statistic
Employment rate: employed / persons aged between 16 and 64 X 100.

Unemployment rate: people not employed / people employed X 100

The Balance of payment
the difference in total value between
payments into and out of a country
over a period.
The Economic system
Economic system

Is the collection of decision that a country

makes regarding how to organize and
economy and managed the resources.
Planned Economy
The state make the economic decision
and owns the capital necessary to
production.

There is no competition

Price is determined by the cost of

production

The objective of this system is equality

 Free market or capitalist economy

No state intervention Consumers are able to The company

Companies decided
choose what to buy so aims to make as
what to produce, how
Capital is privately companies have to be much profit as
much and set the price
owned innovative possible
 Mixed Economy (Social democracia)

Variant of a capitalist economy but with the state having a

more significant role

The state intervene in order

All the previous characteristics of to guarantee the basic
a market economy. needs for the majority of the
population.
Private ownership of the means of
production Throw taxation the state
fund education, healthcare
Competition and other services
…
 Four Characteristics of the Capitalist system

Law of Supply and demand Stock market

Free competition Advertisement
Globalization

integration of national
markets in a global scale
 Economic dimension

Trade: Standardization:

Specialization in an products have become

economic activity and standardized and can be
imports other goods manufactured anywhere

Cultural dimension: Political:

Finance: creation of
spread of cultural
elements as a result of transnational
free movement of organizations G8,
the development in
capital WTO, WB,
communications
 Causes of the globalization
Key word is Technology

Transport network Improvement in communication

Easy movement of
goods and people
Instant flow of
information
Trade and tourism
Internet facilitate the
Cheap transportation
movement of capital and
information
Container ships and long
range planes
Global supply chains
Multinationals

Multinationals are large

companies that are
located in more than
one country. They have
a head office where
strategic decision are
made. The subsidiaries
carried out these
decisions.
Offshoring
Offshoring is the transferring activities or ownership of a complete
business process to a different country from the country (or
countries) where the company receiving the services is located.
This is primarily to access a lower cost labor market

Disadvantages:
Advantages:
increased
increased employment
unemployment in
in developing
developed countries
countries and make
and increased
products and services
pollution in
cheaper
developing
Economic integration

Countries have promoted globalization by creating trade blocs

Trade blocks eliminate duties on goods imported within the

bloc

The members countries can also share a common currency

and a common economic policy