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NUMBER OF SELLERS: One of the five supply determinants assumed constant when a supply curve is constructed, and that shift the supply curve when they change. The other four are resource prices, technology, other prices, and sellers' expectations. This determinant is based on the simple observation that if more people are willing and able to sell a good, then supply is greater.
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Lesson 9: Macro Basics | Unit 1: The Macroeconomy
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Page: 1 of 16
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Let's start with a definition: An economy is an interactive system of production, distribution, and consumption of resources, goods, and services that addresses the basic economic problem of scarcity. - Economic functions are divided into four basic macroeconomic sectors:
- Household: the consumers.
- Business: the producers.
- Government: the regulators and taxers.
- Foreign: the others.
The household sector of the macroeconomy is everyone in an economy who consumes goods and services.- Consumption is the use of natural resources, goods, or services to satisfy wants and needs.
- In a complex economy, consumption is expenditures by the household sector for the purchase of final goods and services.
- Household sector is a term that indicates the consuming, wants-and-needs-satisfying population. Everyone in society is included in the household sector.
The household sector is responsible for consumption.The business sector of the macroeconomy produces the goods and services that are consumed by the household sector. - The business sector is responsible for production by combining the four basic resources: labor, capital, land, and entrepreneurship.
- A business is a method of combining resources for production.
- While the business sector buys raw materials, intermediate goods, and other things. The most important purchase of the business sector is capital goods, or investment in capital.
The business sector is responsible for capital investment.The government sector affects resource allocation and production by imposing laws and regulations that force decisions not otherwise made. - Three levels of government: Federal, State and Local.
- The government sector collects taxes and buys a share of the economy's production, termed government purchases. These are goods such as national defense, highway and street construction, education, and police protection.
- Government purchases do not include transfer payments (Social Security benefits, welfare or unemployment compensation).
The government sector is responsible for government purchases.Economic activity is divided into domestic, everything within the political boundaries of a nation, and foreign, everything outside the boundaries. - Any citizen of the U.S., any firm owned by a U.S. citizen, and the government of any U.S. city are part of the domestic economy.
- Any resident, business or government of another country is part of the foreign sector.
- Exports are goods purchased by the foreign sector that are produced by the domestic economy.
- Imports are goods purchased by the domestic economy that are produced by the foreign sector.
- Net exports are the difference between exports and imports, or exports minus imports.
The foreign sector is responsible for net exports.
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WORLD VIEW An aspect of a scientific theory that includes fundamental, and unverifiable, axioms, beliefs, and values about how the world works. One example of an unverifiable world view axiom is belief in the existence of a supreme, omnipotent, omniscience being--that is, God. Political philosophies, which are essential to economic theories and policies, are intertwined with alternative world views.
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BROWN PRAGMATOX
[What's This?]
Today, you are likely to spend a great deal of time wandering around the shopping mall seeking to buy either an electric coffee pot with automatic shutoff or a brown leather attache case. Be on the lookout for bottles of barbeque sauce that act TOO innocent.
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The portion of aggregate output U.S. citizens pay in taxes (30%) is less than the other six leading industrialized nations -- Britain, Canada, France, Germany, Italy, or Japan.
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"We should never allow ourselves to be bullied by an either-or. There is often the possibility of something better than either of those two alternatives. " -- Mary Parker Follett, management coach
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PDV
Present Discounted Value
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