Module 19: Flashcards
Exam
What led to the evolution of economic institutions in the 1850s?
Mass production and consumption led to the evolution of economic institutions, including the emergence of the limited liability company.
What is a limited liability company (LLC)?
An LLC is a large-scale business that raises capital by selling shares to the public, and it operates within certain legal specifications. Shareholders have limited liability, meaning they are not personally responsible for the company’s debts beyond their investment.
What is the significance of limited liability in an LLC?
Limited liability protects shareholders from being personally responsible for the company’s debts, meaning their personal assets are not at risk.
Name three characteristics of limited liability companies.
Registered under the Companies Act, 2. Shareholders have limited liability, 3. Operate as a separate legal entity with an indefinite lifespan.
What impact did early LLCs like the Dutch East India Company have on economic growth?
Early LLCs raised large amounts of capital, enabled mass production, created job opportunities, promoted global trade, and significantly contributed to economic growth.
What is a monopoly, and how does it relate to LLCs?
A monopoly is a market structure where one company is the sole supplier of a good or service, allowing it to control prices. LLCs like the Dutch East India Company sometimes held monopolies, which led to public outcry and new regulations.
How did LLCs contribute to economic growth in the 18th and 19th centuries?
LLCs raised capital, encouraged investment, enabled mass production, lowered production costs, made goods and services more accessible, created jobs, and supported infrastructure development.
What is a labour union, and why did they form during the Industrial Revolution?
A labour union is an organization of workers formed to improve working conditions. They emerged during the Industrial Revolution in response to worker exploitation.
What are financial institutions, and what are their functions?
Financial institutions are large organizations that offer financial services such as acting as intermediaries in money transfers, granting loans, and managing investments.
What are some examples of trade barriers?
Examples of trade barriers include taxation, employment contracts, minimum wage laws, and exchange rates.
What is the North-South divide?
The North-South divide refers to the economic disparity where the Northern Hemisphere is wealthier and more developed compared to the poorer and less developed Southern Hemisphere.
What is globalisation?
Globalisation refers to the process of breaking down trade barriers to promote the free movement of goods, services, labour, and capital, forming a global economy.
What was the feudal system?
Feudalism was the political and military system in Western Europe during the Middle Ages until the 1400s, where wealth was based on land ownership and power.
How was wealth accumulated in the feudal system?
Wealth was accumulated by landlords who owned land (manors). Peasants lived on the land, paid their surplus production to landlords, who used it for luxury, warfare, and power.
What inventions enabled surplus production in early societies?
Crop rotation, irrigation, food storage, livestock breeding, plant breeding, and refinements in tools.
