Econ - Consumption - Slide 28 59 Consumption the output...

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Slide 28 – 59 Consumption - the output from production that is not invested is consumed - does not simply mean the acquisition and devouring of material goods - not just physical stuff goods and services - consumption in the economic sense refers to the utilization of economic capital – either directly or indirectly through produced goods and services – to generate happiness (or utility) - Canada’s productivity has been declining b/c too much emphasis on consumption vs. Investment - No necessary link between the amount of material devoured in consumption and the happiness derived there - Thus, there does not have to be a conflict b/w sustained consumption growth and the finite capacity of natural capital - If policy can be well constructed there will not be conflict - Perhaps we do not care about future generation concerned that people do care but will not do anything about it - However, such a conflict must inevitability arise if increased consumption growth relies too heavily on material throughput relative to the utilization of knowledge and social capital - Intermediary acts as a way of exchange (banks) - Investments are a way of saving (less consumption) - Real Resources not consuming b/c people want to save - Real Resource Exchange putting money into the bank, an investor borrows money then puts it into consumption - Investment Banks – high risk investments in the states have been hit very hard (possibly because of housing markets) - Lack of regulation
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- Investment banks have made huge risky loans based on continuous climb of housing marks - Now supply is more than demand and there are unoccupied houses - Mortgages are worth more than what they could sell the house for - Moral Hazard : if you establish (as a government) to bailout risky investors, individuals are more inclined to make risky investments - Costs associated w/bailing out vs. Letting a well known bank go under - The environmental impacts associated with production vary by type and degree across different sectors (primary/secondary – manufacturing/service) - This differentiation across sectors is a key consideration in examining the impact of trade on the environment, since trade can cause dramatic sectoral shifts in the distribution in the distribution of production 2.3-1: Primary Production (slide 32 – 35) Primary Production – the direct use of nature capital and therefore linked w/environmental effects - The environmental effects of primary production are typically tied quite closely to
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Econ - Consumption - Slide 28 59 Consumption the output...

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