Germany Jahrgangsstufe 11 Economics and Law (WSG-W track)
Chapters: 7
1. The economic order as a framework
Economic order as a framework
- Market Failure – A market fails when buying and selling on its own does not give the best result for society. Resources are used in the wrong amounts: too much of some goods (pollution, cigarettes), too little of others (street lights, vaccines, education). Main causes: externalities, public goods, merit and demerit goods, imperfect information, market power and unfair inequality. Governments try to fix it with taxes, subsidies, rules, direct provision and information, but government action can also fail.
2. Law as a framework for action
Law as a framework for action
- Rule of Law – The rule of law means everyone, including the government and its leaders, must follow the same known laws, which are applied equally by fair and independent courts. Its main principles are supremacy of law, equality before the law, clear and public laws, fair trials, protected rights and separation of powers. Laws are made and changed through an open process, can be reviewed by courts against a constitution or charter of rights, and countries also agree to international law through treaties.
3. International economic interdependence
International economic integration
- International Trade – International trade is buying and selling goods and services across the boundaries of countries. Selling abroad is export; buying from abroad is import. It helps nations (foreign exchange, growth, jobs) and firms (profit, new markets). Exports and imports follow fixed steps and need many documents, such as the letter of credit and bill of lading. The WTO (1995) makes trade rules and works to cut trade barriers.
- International Trade: Basis, Balance, WTO and Ports – International trade is the exchange of goods and services between countries. It began with barter, grew along routes like the Silk Route, passed through the cruel slave trade and colonial trade, and expanded with industry. Countries trade because they differ in resources, population, development, foreign investment and transport. Balance of trade compares exports and imports. Trade can be bilateral or multilateral; free trade lowers barriers, while dumping sells goods abroad below cost. The WTO sets global rules, regional blocs group neighbours, and ports of many types act as gateways.
4. Capital markets and investing
Global future trends
- The Making of a Global World – People, goods, ideas and germs have moved across the world for thousands of years: on the silk routes, with food crops like potato and maize, and with diseases like smallpox. Between 1815 and 1914 the world economy grew through three flows: goods, labour and capital, helped by railways, steamships and refrigerated ships. Colonies paid a price: rinderpest in Africa and indentured labour from India. After the First World War came mass production in the USA and then the Great Depression of 1929, which hit India's farmers hard. After 1945, the Bretton Woods system, the IMF and the World Bank rebuilt the world economy.
5. Institutional economics view of business and law
Institutional economics and game theory
- Game Theory: Making the Best Choice When Others Choose Too – Game theory studies decisions where your result depends on what others choose. A pay-off matrix lists each player's gain for every pair of choices. A dominated strategy is always worse and can be removed. A Nash equilibrium is a pair of choices where no player gains by changing alone; the prisoner's dilemma shows it can be worse for everyone than cooperating. In a zero-sum game, the play-safe (maximin/minimax) strategies meet at a saddle point when the game is stable; otherwise players use a mixed strategy, found by drawing expected-pay-off lines and taking the highest point of the lower edge.
6. Global future trends
Global future trends
- The Making of a Global World – People, goods, ideas and germs have moved across the world for thousands of years: on the silk routes, with food crops like potato and maize, and with diseases like smallpox. Between 1815 and 1914 the world economy grew through three flows: goods, labour and capital, helped by railways, steamships and refrigerated ships. Colonies paid a price: rinderpest in Africa and indentured labour from India. After the First World War came mass production in the USA and then the Great Depression of 1929, which hit India's farmers hard. After 1945, the Bretton Woods system, the IMF and the World Bank rebuilt the world economy.
7. Profile area (economics-social science school)
Economic systems in depth · Law in depth · International trade in depth · Investing in depth · Institutional economics in depth · Global future trends in depth · Economics and law project
- Economic Systems: Who Decides What, How and for Whom? – Every society has limited resources and must decide what to produce, how to produce it and for whom. A traditional economy answers by custom, a market economy by prices and private choice, and a command (planned) economy by a government plan. Capitalism is built on private ownership and markets; socialism on shared or state ownership and planning. Real countries are mixed economies: markets make most goods while the government provides public services, rules and support.
- Rule of Law – The rule of law means everyone, including the government and its leaders, must follow the same known laws, which are applied equally by fair and independent courts. Its main principles are supremacy of law, equality before the law, clear and public laws, fair trials, protected rights and separation of powers. Laws are made and changed through an open process, can be reviewed by courts against a constitution or charter of rights, and countries also agree to international law through treaties.
- International Trade – International trade is buying and selling goods and services across the boundaries of countries. Selling abroad is export; buying from abroad is import. It helps nations (foreign exchange, growth, jobs) and firms (profit, new markets). Exports and imports follow fixed steps and need many documents, such as the letter of credit and bill of lading. The WTO (1995) makes trade rules and works to cut trade barriers.
- International Trade: Basis, Balance, WTO and Ports – International trade is the exchange of goods and services between countries. It began with barter, grew along routes like the Silk Route, passed through the cruel slave trade and colonial trade, and expanded with industry. Countries trade because they differ in resources, population, development, foreign investment and transport. Balance of trade compares exports and imports. Trade can be bilateral or multilateral; free trade lowers barriers, while dumping sells goods abroad below cost. The WTO sets global rules, regional blocs group neighbours, and ports of many types act as gateways.
- Smart Ways to Manage Your Finances – Inflation makes prices rise, so the same money buys less. Money kept in a bank earns interest: simple interest is paid only on the original amount, while compound interest also earns interest on earlier interest, so it grows faster over time. A budget plans income into needs, wants and savings. Savings are kept safe; investments can grow but carry risk, and higher possible returns mean higher risk. Insurance shares risk among many people. Income tax is paid on income above a limit, at rates that rise with income.
- Game Theory: Making the Best Choice When Others Choose Too – Game theory studies decisions where your result depends on what others choose. A pay-off matrix lists each player's gain for every pair of choices. A dominated strategy is always worse and can be removed. A Nash equilibrium is a pair of choices where no player gains by changing alone; the prisoner's dilemma shows it can be worse for everyone than cooperating. In a zero-sum game, the play-safe (maximin/minimax) strategies meet at a saddle point when the game is stable; otherwise players use a mixed strategy, found by drawing expected-pay-off lines and taking the highest point of the lower edge.
- Environment and Sustainable Development – The environment gives us resources, soaks up our waste, supports life and gives beauty. When we take resources faster than nature renews them, or throw waste faster than it can absorb, we cross its carrying capacity and face an environmental crisis. India faces land degradation, air and water pollution, forest and biodiversity loss. Burning fossil fuels traps heat and causes global warming; CFCs thin the ozone layer. Sustainable development meets today's needs without harming the ability of future generations to meet theirs, using clean energy, less waste and traditional knowledge.