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What is Economics?
What is Economics?
Economics is a social science that focuses on the production, distribution, and consumption of goods and services. It also analyzes the choices made by individuals, businesses, governments, and nations in allocating resources.
What is the main assumption of Economics?
What is the main assumption of Economics?
Economics assumes that humans have unlimited wants within a world of limited means.
What is globalization?
What is globalization?
Globalization refers to the processes by which a company brings its business to the rest of the world.
The Silk Road was a trade route that connected China to Europe.
The Silk Road was a trade route that connected China to Europe.
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What were the main goods traded along the Silk Road?
What were the main goods traded along the Silk Road?
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What was the Galleon Trade?
What was the Galleon Trade?
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What is the Bretton Woods System?
What is the Bretton Woods System?
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The Bretton Woods System used gold as the basis for the US Dollar.
The Bretton Woods System used gold as the basis for the US Dollar.
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What is Fiat money?
What is Fiat money?
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What are some of the advantages of Fiat money?
What are some of the advantages of Fiat money?
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Study Notes
Economics
- Economics is a social science focusing on production, distribution, and consumption of goods and services.
- It analyzes choices made by individuals, businesses, governments, and nations to allocate resources.
- Economists analyze how limited resources are allocated for production, distribution, and consumption given unlimited human wants.
Global Economics
- Global economics is a result of human innovation and technological progress.
- It's characterized by increasing integration of economies worldwide through the movement of goods, services, and capital across borders.
- Factors include trade in goods and services; financial markets; technology; and labor.
Globalization vs. Internationalization
- Localization is adapting a product or service to a specific market.
- Globalization is the process of bringing a company's business to the rest of the world.
- Internationalization is designing products, services, and operations to facilitate expansion into international markets.
Silk Road
- The Silk Road was the first global trade route in history.
- It existed from 130 BCE to 1453 CE.
- The route spanned 6,437 kilometers (4,000 miles).
- The Silk Road facilitated the exchange of religion, ideas, and goods, leading to the development of multicultural cities.
- It was a catalyst for new technologies and innovations that changed the world.
Galleon Trade
- Galleon trade occurred during the age of mercantilism (16th-18th centuries).
- It involved Spanish sailing vessels making annual round trips across the Pacific between Manila (Philippines) and Acapulco (Mexico).
- This trade was important for communication and economic links between Spain and its Philippine colony.
International Monetary System
- The international monetary system provides the framework for rules and procedures for international payments, exchange rates, and capital movements.
Era of Bimetallism
- Before 1870, both gold and silver coins were used in international payments.
- Exchange rates between currencies were determined by gold or silver content.
- Some countries used either a gold or silver standard.
Gold Standard
- From 1875 to 1914, gold was the basis for unrestricted coinage.
- There was a two-way convertibility between gold and national currencies at a stable ratio.
- The gold standard is a monetary system where paper money is convertible into a fixed amount of gold.
Bretton Woods System
- Negotiated in 1944, it was an agreement by delegates from 44 countries at the UN Monetary and Financial Conference.
- Establishing a system of fixed exchange rates pegged to the US dollar. This aimed to prevent competitive devaluations of currencies and ensure international economic growth.
- Gold was the basis for the US dollar, and other currencies were pegged to its value.
Fiat Monetary System
- Fiat money is government-issued currency not backed by a physical commodity (like gold or silver).
- Its value is derived from the relationship between supply and demand, and the stability of the issuing government.
Floating Rate System
- Exchange rates are determined by the foreign exchange market based on supply and demand relative to other currencies.
- This system is more flexible than the gold standard and the Bretton Woods agreement.
Advantages of Fiat Money
- Central banks have more control over the economy.
- It’s more cost-efficient to produce.
- Governments have more flexibility.
Disadvantages of Fiat Money
- It’s not foolproof for economic protection.
- It can create bubbles.
- It carries the risk of inflation.
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Description
This quiz covers the fundamentals of economics, global economics, and the distinctions between globalization and internationalization. It explores how production, distribution, and consumption are influenced by human choices and the global economy's interconnections.
