1. THE ECONOMY AND WORK ECONOMY Social institution that ensures the production, distribution and consumption of goods and services. Goods-- tangible objects that are necessary or desired. Services -- intangible activities for which people are willing to pay for.

2. Labor -- physical and intellectual services that people contribute to the production process. Historical Changes in Economic Systems Pre-industrial economies Industrial economies Post-industrial economies.

3. SECTORS OF THE ECONOMY Primary sector --economy that generates raw materials from environment. Secondary -- transforms raw materials into manufactured goods. Tertiary - generates services.

4. Economic Systems Capitalism Predominant economic system in the world. Characterized by: a) Private ownership of means of production b) Self-interest and profit motive c) Free competition d) Repeated investments (capital accumulation)

5. Socialism Puts social cooperation ahead of competition. Characterized by: a) Public ownership of means of production b) Pursuit of collective goals c) Centralized decision making

6. Communism Does not exist. Presumes that members of society will be socially equal. Welfare Capitalism Combines significant government control and free elections. E.g. Sweden

7. State Capitalism Companies are privately owned but cooperate closely with the government. e.g. Japan.

8. GLOBALIZATION Is the shift toward more integrated and interdependent world economy. Two Components of globalization a) Globalization of markets -- many industries historically distinct and separate national markets are merging into one huge global market place.

9. b) Globalization of Production -- tendency to outsource production to other more efficient companies around the world. What drives globalization? a) Decline in barriers to free flow of goods, services and capital. b) Technological changes

10. Group Discussion Is globalization good or bad? Why?