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ALL ABOUT ECONOMICS & BUSINESS 1: HOW ECONOMIES WORK
This film looks at how economies work -- in particular, the market economy.

THE MARKET ECONOMY: This is an economy based on what's called "free enterprise" in which people are free to set up businesses to sell their goods or services and try to make profits. Economists divide the modern economy into primary, secondary and tertiary sectors. Some organisations are owned by the government - the public sector. The combination of private and public industries is called the mixed economy.

SO WHAT IS ECONOMICS? Economics is a social science. "Social" means it deals with people; it's a science in that it tries to explain how the economy works. Microeconomics looks at the way individuals and businesses make decisions, including factors like price, supply and demand, and the price elasticity of demand. Macroeconomics, meanwhile, looks at how the wider economy as a whole works, including theories such as those of Adam Smith and the "invisible hand" of the market.

BOOM & BUST: There are drawbacks to the market economy -- problems such as inflation and also cycles of "boom and bust". A spectacular example is the "credit crunch" of 2008, when US banks overstretched themselves by handing out too many mortgages to unreliable borrowers. A bust can lead to a slump, or recession, like the historic Wall Street Crash of 1929 in the US.

KEYNES V MONETARISM: John Maynard Keynes believed that governments could intervene to deal with a recession -- by stimulating demand. But in the 1970s, inflation became the big enemy and Margaret Thatcher tried a new economic theory - monetarism, which involved attempting to control the supply of money.

OTHER ECONOMIC MODELS: But the free market isn't the only economic model. Influenced by the ideas of Karl Marx, countries such as Russia and China, had revolutions and set up what they claimed to be communist economies. China is still, in theory, a communist country. In practice, it has embraced capitalism, including the exploitation of workers.

GLOBALISATION: To cut costs, companies are increasingly outsourcing their production to countries where workers are not given the same rights as in this country. In theory, multinational businesses support free trade - in other words, no barriers to selling goods. But in practice Europe and the US step in to protect their industries.

A BETTER MODEL? The market economy is based on growth and credit - but do economies have to be like this? Is it possible to develop an alternative model which doesn't depend on consumerism, waste and greed?
DVD
30 minutes
2009
 
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