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KNOWLEDGE ECONOMY: The notion that economic activity is oriented on the production and consumption of knowledge (or information), which is fundamentally different from economic activity oriented on the production and consumption of manufacturing or agricultural goods. The key to the knowledge economy is the widespread use of computers, the Internet, and other information-based technology. Differences in the knowledge economy result for the public goods nature of knowledge and information (that is, use by one does not exclude use by another).
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Lesson 4: Production Possibilities | Unit 4: Analysis
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Page: 17 of 24
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Topic:
Resource Quantity and Quality
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Three ways to increase resource quantity.- Labor: Labor increases through (1) natural population growth, (2) immigration from other nations, and (3) more participation and fewer nonworkers.
- Capital: The key to getting more capital is investment, giving up satisfaction today to get capital tomorrow.
- Materials: The key to increasing their quantity is exploration. Exploration is best illustrated by digging or drilling into the Earth's crust in search of mineral or fossil fuel deposits.
Two ways to increase resource quality.- Education-The Quality of Labor: Education increases the quality of labor resources. Better educated workers are more productive workers.
- Education can be formal, sitting-in-a-classroom or informal, on-the-job-training experience. Both are valuable methods of increasing the quality labor.
- Technology-The Quality of Capital: Technology is the knowledge and information society as a whole possesses concerning the production of goods and services. Better technology enables more production.
- Technology concerns all aspects of production, but it is often seen as an improvement in the quality of capital.
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SAVING-INVESTMENT MODEL A variation of the Keynesian injections-leakages model that includes the two private sectors, the household sector and the business sector. This variation, more formally termed the two-sector injections-leakages model, captures the interaction between induced saving (and indirectly induced consumption expenditures) and autonomous investment expenditures. This model provides an alternative to the two-sector aggregate expenditures (Keynesian cross) analysis of the macroeconomy, including equilibrium, disequilibrium, and the multiplier. Equilibrium is identified as the intersection between the saving line and the investment line. Two related variations are the three-sector injections-leakages model and the four-sector injections-leakages model.
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The earliest known use of paper currency was about 1270 in China during the rule of Kubla Khan.
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"If things are not going well with you, begin your effort at correcting the situation by carefully examining the service you are rendering, and especially the spirit in which you are rendering it." -- Roger Babson, statistician and columnist
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FIFO
First In First Out
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