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September 23, 2018 

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WEALTH PYRAMID: A handy technique that many get-rich-quick schemes use to transfer a little wealth from a lot of people into the overflowing pockets of a few. In works in this manner--A person or business establishes a multi-level pyramid of investors, employees, or "distributors." Each level is responsible for recruiting the next level beneath it. The trick is that each distributor at one level recruits several distributors into the next lower level in an ever-expanding fashion. Each recruit transfers a little, teeny, tiny bit of their own wealth to the next higher level. In that each higher level has fewer members, that little, teeny, tiny bit of wealth accumulates rapidly, making those at the top incredibly well-off.

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Lesson 1: Economic Basics | Unit 3: The Economy Page: 8 of 18

Topic: A Mixed Economy: Markets and Government <=PAGE BACK | PAGE NEXT=>

Markets do an effective (and efficient) job of answering the three questions of allocation--most of the time.
  • Markets are the VOLUNTARY exchange of goods and services.
  • A pure market economy is an economy that uses nothing but markets to allocate resources.
  • A pure market economy is a useful theoretical benchmark.
Market responses to the allocation questions:
  • What? Resources are used to produce goods with the highest prices.
  • How? Goods are produced using the combination of resource with the lowest prices.
  • For Whom? People with more income buy more goods.

Government also helps answer the three questions of allocation.
  • Government allocation is INVOLUNTARY. It sets the laws and rules.
  • A pure command economy is an economy that uses nothing but government to allocate resources.
  • A pure command economy is another useful theoretical benchmark.
Government responses to the allocation questions:
  • What? When government spends taxes, it dictates what goods will be produced.
  • How? Government has laws and rules that specify how resources will be used to produce goods.
  • For Whom? Government collects taxes from some people and distributes them among other people.

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UNEMPLOYMENT SOURCES

The four key types or sources of the unemployment of resources, especially labor, are cyclical, seasonal, frictional, and structural. The first, cyclical, in most important in the macroeconomic analysis of business cycles. The last two, frictional and structural, are combined into what is termed natural unemployment. Stabilization policies are generally aimed at reducing cyclical unemployment.

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BLACK DISMALAPOD
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Today, you are likely to spend a great deal of time going from convenience store to convenience store wanting to buy either an AC adapter for your CD player or storage boxes for your family photos. Be on the lookout for crowded shopping malls.
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A half gallon milk jug holds about $50 in pennies.
"People of mediocre ability sometimes achieve outstanding success because they don't know when to quit. "

-- George Allen, U.S. senator

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