Chapter 19: The American Economy
Section 1: Economic Resources
Producing Goods and Services
- tangible products like books and automobiles that we use to satisfy our needs and wants.
- work that is performed for someone else.
Factors of Production
(4 types)- resources necessary to produce goods and services.
- refers to all of the “gifts of nature
” that make production possible.
(fertile fields, abundant rainfall, forests, mineral deposits, etc.)
- the nation’s labor force or human resources.
Labor refers to both physical and mental
efforts that people contribute to the production of goods and services.
- also called capital goods.
They are the tools
, and buildings
used to make
are unique in that they are a result of production.
-Economists differentiate capital goods
from consumer goods
are things like clothes, clocks, shoes, foods, bicycles, and radios.
satisfy wants indirectly by aiding production of consumer goods.
are individuals who start new businesses, introduce new products, and
improve management techniques.
Gross Domestic Product
- the total value, in dollars, of all the final
goods and services produced in a country
a single year.
-A *final good
- is a good, such as a loaf of bread, sold
to the user.
-The *intermediate goods
- are the goods that go into the making of a loaf of bread, (flour or
wheat, sugar, honey) are not counted in GDP.
-When computing GDP, economists count only final goods and services.
-If they counted both final and intermediate
goods; they would be double-counting,
or counting a
good more than once.
-Second hand sales
- the sale of used goods
- are not counted as part of the GDP as well.
-Only the original sale is included in GDP.
– (chart p. 426)
-Remember that GDP is a monetary measure.
-A monetary measure is helpful if we are to compare the number of goods and services produced
and get a meaningful idea of their relative worth.
-If GDP is higher than the previous year, then the economy is expanding