2. Introduction
Economy is a social institution that
has one of the biggest impacts on
society.
Economy is not only numerical but it is
also people.
It is a social institution that organizes
all production, consumption and trade
of goods in the society.
3. Economic Sytem
Vary from one society to another.
Production typically splits in 3 sectors;
primary sector which extracts raw
materials from natural environments.
Workers and farmers fit well in this
category. Secondary sector gains the
raw materials and transforms them
into manufactured goods. Primary
sector extracts oil from the earth then
someone
4. Economic Sytem
from the secondary sector refines the
petroleum to gasoline. Tertiary sector
involves servuce rather than goods. It
offers services by doing things rather
tham making things.
5. International Financial
Institutions
World economies have been brought
closer together than globalization.
When American economy sneezes,
the rest of the world catches cold.
Other economies in the world also
have a significant impact on global
market and finance. Example the
financial crises experienced by Russia
and Asia affected the world economy.
The strength of a more powerful
economy brings greater effect on
other countries.
7. Bretton Woods System
WW I, great Depression in 1903 and
WW II brought fear to nation-states
the need to re structure the world
economy and ensure global financial
stability. These consists the
background for the establishment of
Bretton Woods system.
The Bretton Woods system had 5 key
elements. 1 is the expression in terms
of gold or gold value to establish a par
value.
8. Bretton Woods System
Example the 35 US dollar pegged by
US per ounce of gold is the same as
175 Nicaraguan cordobas dor one
dollar
Second element is the “official
monetary authority in each country
would agree to exchange rates, plus
or minus a one-percent margin”.
Third element is the establishment of
an overseer for these excahnge rates,
thus the IMF was founded.
9. Bretton Woods System
Eliminating restrictions on the
currencies of the member states in the
international trade is the fourth key
element.
The final element is that the US dollar
became the global currency.
10. Have a simple research on the following:
To be passed at the end of class time.
General agreement on tariffs and trade
(GATT)
World trade Organization (WTO)
International Monetray Fund (IMF)
World Bank (WB)
The Organization of Petroleum and
Development (OECD)
Organization of Petroleum Exporting
Countries (OPEC)
European Union (EU)
North African Free Trade Agreement (NAFTA)
