service economy

(noun)

Service economy refers to the increased importance of the service sector compared to the manufacturing sector. The service economy in developing countries is mostly concentrated in financial services, hospitality, retail, health, human services, information technology, and education.

Related Terms

Examples of service economy in the following topics:

  • The Service Economy

    • The world economy is evolving into a service-driven economy as reliance on value-based service increases.
    • The world economy is increasingly characterized as a service economy.
    • As their economies continue to develop, the importance of the service sector continues to grow.
    • As a result of these changes, people are leaving the agricultural sector to find work in the service economy.
    • Define the role of a service economy in developed and developing countries

  • Service Economy Growth

    • Most of the U.S. economy is classified as services as of 2011 (agriculture 1.2%, industry 22.1%, services 76.7%).
    • As shown below, most of the U.S. economy is classified as services.
    • Services are everywhere in today's world.
    • Services are said to be essential to increase productivity and growth and are considered salient to the development of knowledge-based economies.
    • Many modern services combine both products and services, and the distinction between the two has blurred.

  • Defining Aggregate Expenditure: Components and Comparison to GDP

    • Aggregate expenditure is the current value of all the finished goods and services in the economy.
    • In economics, aggregate expenditure is the current value of all the finished goods and services in the economy.
    • The aggregate expenditure determines the total amount that firms and households plan to spend on goods and services at each level of income.
    • An economy is at equilibrium when aggregate expenditure is equal to the aggregate supply (production) in the economy.
    • The economy is not in a constant state of equilibrium.

  • Introducing Aggregate Supply

    • Aggregate supply is the total supply of goods and services that firms in a national economy plan to sell during a specific time period.
    • In economics, aggregate supply is the total supply of goods and services that firms in a national economy plan to sell during a specific time period.
    • It is the total amount of goods and services that the firms are willing to sell at a given price level in the economy.
    • In the equation, Y is the production of the economy and Y* is the natural level of production of the economy.
    • Aggregate supply is the total quantity of goods and services supplied at a given price.

  • The Economy

    • Economies can be divided into formal economies and informal economies.
    • A formal economy is the legal economy of a nation-state, as measured by a government's gross national product (GNP), or the market value of all products and services produced by a country's companies in a given year.
    • A market is a central space of exchange through which people are able to buy and sell goods and services.
    • In a capitalist economy, the prices of goods and services is mainly controlled through the principles of supply and demand and competition.
    • "Supply and demand" refers to the balancing of the amount of a good or service produced and the amount available for sale .

  • Mixed Economies

    • Most modern economies are mixed, including the United States and Cuba.
    • However, to mitigate the negative influence that a pure market economy has on fairness and distribution, the government strongly influences the economy through direct intervention in a mixed economy.
    • Different ways a government directly intervenes in an economy include:
    • Generally, individuals in mixed economies are able to:
    • However, the government in mixed economies generally subsidizes public goods, such as roads and libraries, and provide welfare services such as social security.

  • Differences Between Centrally Planned and Market Economies

    • Before you can analyze any national economy, you need to understand these two opposing viewpoints on how to run an economy.
    • A pure planned economy has one person or group who controls what is produced; all businesses work together to produce goods and services that are planned and distributed by the government.
    • These economies are also called command economies because everyone must follow specific guidelines set up by the controlling authority.
    • Planned economies have several advantages.
    • Although they avoid many of the inadequacies of planned economies, market economies are not free of their own problems and downfalls.

  • Informal Economy

    • This is in contrast to the formal economy; a formal economy includes economic activity that is legal according to national law.
    • Formal economy goods may be taxed and are included in the calculation of a government's gross national product (GNP), which is the market value of all products and services produced by a country's companies in a given year.
    • All economies have informal elements.
    • This video describes how the informal economy fails to provide some of the same social benefits as work in the formal economy.
    • Analyze the impact of the informal economy on formal economy, such as the black market or working "under the table"

  • Economies of Scale and Network Externalities

    • Economies of scale and network externalities are two types of barrier to entry.
    • A natural monopoly arises as a result of economies of scale.
    • Network externalities (also called network effects) occur when the value of a good or service increases as a result of many people using it.
    • Because of network effects, certain goods or services that are adopted widely will appear to be much more attractive to new customers than competing goods or services.
    • Define Economies of Scale., Explain why economies of scale are desirable for monopolies

  • Introduction to How the U.S. Economy Works

    • In every economic system, entrepreneurs and managers bring together natural resources, labor, and technology to produce and distribute goods and services.
    • Marx contrasted capitalist economies to "socialist" ones, which vest more power in the political system.
    • Marx and his followers believed that capitalist economies concentrate power in the hands of wealthy business people, who aim mainly to maximize profits; socialist economies, on the other hand, would be more likely to feature greater control by government, which tends to put political aims -- a more equal distribution of society's resources, for instance -- ahead of profits.
    • As a result, the American economy is perhaps better described as a "mixed" economy, with government playing an important role along with private enterprise.
    • Although Americans often disagree about exactly where to draw the line between their beliefs in both free enterprise and government management, the mixed economy they have developed has been remarkably successful.