1. Globalization

• Globalization


  A process when states are becoming more unite and co-dependent
• Import and export goods

  More profit, more products to buy, higher supply, price get down
• Impact on local business

  Higher unemployment rate in domestic country, lower demand, reducing the production
• Economic system


  Organization and distribution of the available resources, services and goods by institutions of market economies or centrally planned economics
• Economic system answers 3 basic questions

  1. What will be produced? (based on the demand, use the gap in the market to supply with desire product)

  2. How will it be produced? (apply the least costly technology)

  3. How will the output society produces be distributed?
• Types of economic systems

  • Market economy (companies and consumers)
  • Central Economy (government)
• Answers depend on the type of economy (command, market economy) and choices about inputs and outputs
• Classification of economic systems

  • Coordination of economic activities (Market ES, Command ES)
  • Ownership of the means of production (Land, Labour, Capital)
• Production possibility frontier (PPF)


  Shows the maximum amounts of production that can be obtained by an economy, given its technological knowledge and quantity of inputs available
• Financial system


  A set of institutions including banks, insurance companies, and stock exchanges which exist on firm, regional, and global levels
• Types of shocks


  • External (pandemic, global crisis)
  • Internal (inflation, natural disasters, change in government)
• Types of banks


  • Commercial bank (companies-profit) (bank account, loans, mortgages, investment possibilities)
  • Central bank (price stability)
• Stock exchange


  A place when you can buy or sell stocks
• Types of financial systems

  • Bank-based (get finance from bank, interest)
  • Capital market-based
• Money's role


  • Medium of exchange
  • Unit of accounting (countable, devisible)
  • Store of value
• Evolution of money


  • Barter (cashless society, trading goods and services for other goods and services)
  • Commodity money (commodity that becomes a medium of exchange, e.g. tobacco, rice, salt, cattle, olive oil, wine, silver, gold and copper)
  • Coins (7th century BC) (small metal piences with fixed weight and value)
  • Paper money
  • Bank money
  • Payment cards (debit and credits cards)
  • Electronic payment instrument (electronic money, e.g. pre-paid transport cards)
  • Cryptocurrency
• Commodity is a raw material or primary agricultural product that can be bought and sold, such as copper or coffee