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ABSTRACTION: Simplifying the complexities of the real world by ignoring (hopefully) unimportant details while doing economic analysis. Abstraction is often criticized because it's, well, it's JUST NOT REALISTIC. However, when done correctly (ignoring things that JUST DON'T MATTER), then the pursuit of knowledge is greatly enhanced by abstraction. For example, when travelling cross country along a high-speed interstate highway, a paper road map is a handy tool. It shows towns and cities along the way, the major intersections, rest stop locations, and other important points of interest. However, it ignores unimportant details. It doesn't realistically show the location of every tree, bush, or blade of grass. Why bother? This information won't enhance your road trip.
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Lesson 13: The Firm | Unit 4: U.S. Firms
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Page: 21 of 24
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In this unit, you should have learned about:- The distribution of productive activity among proprietorships, partnerships, and corporations in the U.S. economy.
- How proprietorships tend to be small scale operations, with 73% of the firms producing only 5% of the output.
- How corporations tend to be large scale operations, with 20% of the firms producing 89% of the output.
- The types of industries -- construction, transportation, trade, and services -- that tend to attract proprietorships.
- The types of industries -- agriculture, mining, and especially finance -- that tend to attract partnerships.
- The types of industries -- mining, manufacturing, trade, and finance -- that tend to attract corporations.
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INDUCED SAVING Household saving that depends on income or production (especially disposable income, national income, or even gross domestic product). That is, changes in income induce changes in saving. Induced saving reflects the fundamental psychological law put forth by John Maynard Keynes. It is measured by the marginal propensity to save (MPS) and is reflected by the positive slope of saving line. The alternative to induced saving is autonomous saving, which does not depend on income.
Complete Entry | Visit the WEB*pedia |
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The average bank teller loses about $250 every year.
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"Plans are only good intentions unless they immediately degenerate into hard work." -- Peter Drucker, management consultant
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GDI
Gross Domestic Income
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