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SCARCE RESOURCE: A resource with an available quantity less than its desired use. Scarce resources are also called factors of production. Scarce goods are also termed economic goods. Scarce resources are used to produce scarce goods. Like the more general society-wide condition of scarcity, a given resource is scarce because it has a limited availability in combination with a greater (potentially unlimited) productive use. It's both of these that make it scarce. In other words, even though an item is quite limited it will not be a scarce resource if it has few if any uses (think pocket lint and free good).
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Lesson 18: Banking | Unit 3: Reserve Banking
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Page: 16 of 24
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Topic:
Goldsmith Reserves
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Knights make gold deposits, others withdraw gold, merchants seek investment loans, and others repay loans. Fred must keep sufficient gold to satisfy any withdrawal. Required reserves: - Fred concludes that he needs no more than 10 pounds of gold to back each 100 pounds of gold deposits.
- He doesn't need to keep 100% of the deposits in reserves.
Fred has discovered modern fractional-reserve banking. Excess Reserves: - Fred uses the other 90% for the loans which earn interest and make his business a profitable one.
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IN-KIND PAYMENTS A payment, usually in exchange for the productive efforts of resources, that takes the form of goods and services produced by the resource buyer rather than the economy's standard monetary unit (that is, dollars). In other words, resource owners are compensated with a portion of the output that they help to produce. The standard method of compensation, which is illustrated by the circular flow model, is for a firm to pay resource owners using money revenue received from selling its production. Hence most factor payments are monetary payments. However, in some circumstances firms and resource owners find it more convenient to use actual production for compensation, eliminating the sell-production-for-money step.
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On a typical day, the United States Mint produces over $1 million worth of dimes.
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"Courage is the ladder on which all the other virtues mount." -- Claire Boothe Luce, diplomat, writer
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RTA
Reciprocal Trade Agreement
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