ch02lecture - CHAPTER CHECKLIST When you have completed...

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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 the macroeconomic performance— standard of living, cost of living, and economic fluctuations—of the United States and other economies. 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 Investment goods Government goods and services Exports of 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. Investment 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 and bridges. Exports goods Goods and services produced in the United States and sold in other countries. For example, computers and banking services. 2.1 WHAT, HOW, AND FOR WHOM?
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Figure 2.1(a) shows the relative magnitudes of the different types of goods and services in 2002: 2.1 WHAT, HOW, AND FOR WHOM? Consumption 61% Investment 13% Government 17% Exports 9%
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2.1 WHAT, HOW, AND FOR WHOM? Figure 2.1(b) shows the largest five items of services produced. And the largest five items 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 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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Labor Labor The work time and work effort that people devote to producing goods and services. Human capital
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This note was uploaded on 12/28/2009 for the course MATH Ec101 taught by Professor Mr.keohane during the Fall '08 term at Louisiana College.

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ch02lecture - CHAPTER CHECKLIST When you have completed...

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