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The Global Economy

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You might hear a lot about something called the Global Economy. What is it exactly?

The Global Economy has both a simple and a complex definition. The simple one is this: Global economy means that things can be bought and sold all over the globe. In other words, just because you grow wheat in Kansas or cotton in Alabama or make cars in Michigan or computers in California--doesn't mean you have to sell them to the people in your town or your state or even your country. Today, in the age of lightning-speed transportation, you can sell wheat, cotton, cars, and computers to people all over the world. Airplanes, ships, trains, and trucks carry goods all over the world in a blink of the eye.

The complex definition has a couple more steps involved, but it's basically the same. In other words, countries now can plan to get their goods from anywhere in the world, not just from places they've always gotten them. A classic example of this is cars: America used to make nearly all the cars sold to Americans; now, most cars driven by Americans are made by Japanese companies. (And in an even more complex element, some Japanese companies have built auto plants here in America; so, technically, those are American-made cars sold by Japanese companies.)

Computers (which are also made in many countries all around the world) have made this global buying and selling all the easier by keeping track of shipments and calculating payments in split-seconds. The Internet has also helped in a big way, making people aware that such global buying and selling is possible and relatively easy.

So, the next time you hear the phrase Global Economy, you'll know that it means the idea that goods can be bought and sold all around the world.