ch02slecture - The U.S. and Global Economies CHAPTER 2...

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The U.S. and Global Economies CHAPTER 2
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When you have completed your study of this chapter, you will be able to C H A P T E R C H E C K L I S T Describe what, how, and for whom goods and services are produced in the United States. 1 Use the circular flow model to provide a picture of how households, firms, and governments interact. Describe what, how, and for whom goods and services are produced in the global economy. 2 3
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2.1 WHAT, HOW, AND FOR WHOM? What Do We Produce? We divide the vast array of goods and services produced into: Consumption goods and services Capital goods Government goods and services Export goods and services
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Consumption goods and services Goods and services that are bought by individuals and used to provide personal enjoyment and contribute to a person’s standard of living. For example, movies and Laundromat services. Capital goods Goods that are bought by businesses to increase their productive resources. For example, cranes and trucks. 2.1 WHAT, HOW, AND FOR WHOM?
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Government goods and services Goods and services that are bought by governments. For example, missiles, bridges and police protection. Export goods and services Goods and services produced in one country and sold in other countries. For example, airplanes produced by Boeing and Citicorp banking services sold to China. 2.1 WHAT, HOW, AND FOR WHOM?
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Figure 2.1(a) shows the relative magnitudes of the goods and services produced in 2005: 2.1 WHAT, HOW, AND FOR WHOM? Consumption 60% Capital goods 15% Government 16% Export goods 9%
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2.1 WHAT, HOW, AND FOR WHOM? Figure 2.1(b) shows the largest six types of services produced in 2005. And the largest four types of goods produced.
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2.1 WHAT, HOW, AND FOR WHOM? How Do We Produce? Factors of production The productive resources used to produce goods and services. Factors of production are grouped into four categories: Land Labor Capital Entrepreneurship
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2.1 WHAT, HOW, AND FOR WHOM? Land All the “gifts of nature” that we use to produce goods and services. All the things we call natural resources. Land includes minerals, water, air, wild plants, animals,birds, and fish as well as farmland and forests.
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2.1 WHAT, HOW, AND FOR WHOM? Labor The work time and work effort that people devote to producing goods and services. The quality of labor depends on how skilled people are—what economists call human capital. Human capital The knowledge and skill that people obtain from education, on-the-job training, and
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2.1 WHAT, HOW, AND FOR WHOM? Figure 2.2 shows measure s of human capital and how they have changed
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Capital Tools, instruments, machines, buildings, and other items that have been produced in the past and that businesses now use to produce goods and services. Capital includes semifinished goods, office
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This note was uploaded on 05/31/2008 for the course MHR 324 taught by Professor Jones during the Spring '08 term at Cal Poly Pomona.

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ch02slecture - The U.S. and Global Economies CHAPTER 2...

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