M3L1_ History of the Economies and Economic Theories.pptx

History of economies & economic theories 20th century economic developments aREAS OF STUDY 01History of economies 02 ECONOMIC THEORIES 01 History of EcoNOMIES How have economies developed and changed over time? Terms to production understand Economy: measure of the and consumption of goods a...

History of economies & economic theories 20th century economic developments aREAS OF STUDY 01History of economies 02 ECONOMIC THEORIES 01 History of EcoNOMIES How have economies developed and changed over time? Terms to production understand Economy: measure of the and consumption of goods and services Economic boom: increased economic activity - so there are more profits Economic bust: decreased economic activity - so there are less profits Market: buyers and sellers Free market: free = no government, market = buyers and sellers, so free market means: no government in the market, no government controlling buyers and sellers Economic Change in the 20th century ● After the First World War, the world entered the interwar (between war) period ● Though times were initially good, the world soon entered an economic depression ● This depression continued into World War II when it came to an end, largely due to wartime stimulating the global economy ● After the Second World War, a new political and economic landscape emerged; called the new world order War (1914-1918) and economics War disrupted the normal flow of global trade and domestic economies ● Cities, towns, infrastructure, and trade routes destroyed ● Domestic production centered on war effort ● International trade restricted War (1914-1918) and economics After the conflict, economies focused on rebuilding ● Had to borrow money to rebuild ● Introduced income taxes to pay war debt Some benefits (in some countries): ● New powerful industry ● Factors of production increased ● New technologies ● Women in the workforce War (1914-1918) and economics ● ● ● ● ● Problems for other countries Shortage of goods Hyperinflation Debt with Interest ( Usury) Reparations (costs paid by the losing side) crippled economies (Germany)