Download - The U.S. and Global Economies
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The U.S. and Global Economies
• What, how, for whom? The USA• The circular flow model• What, how, for whom? The
world
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What do we produce?
• Consumption goods and services• Capital goods• Government goods and services• Exports
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What we produce
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The Service Economy
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How do we produce?
• Land• Labor • Capital• Entrepreneurship
We produce by using productive resources
or factors of production
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Land or natural resources
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Labor or “human resources”
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Capital or “manmade instruments of production”
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Human Capital
Human capital is the knowledge and skill people obtain
from education, on-the-job training,
and work experience.
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Measuring human capital
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Entrepreneurship Entrepreneurship is the willingness and ability to combine land, labor and capital into productive enterprises.
• Entrepreneurs identify profitable business opportunities and mobilize and coordinate resources to take advantage.
• Entrepreneurs have a key role in the commercialization of new knowledge
• Sam Walton, Michael Dell, Martha Stewart, and Bill Gates are examples of highly successful entrepreneurs.
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Income received by owners of economic resources
• Rent: Income paid for the use of land.• Wages (and salaries): income paid for the
services of labor.• Interest: income paid for the use of capital.
• Profit (or loss): Income earned by an entrepreneur for running a business.
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Average Wages of Men Compared to HS Grads
Percent Difference in Weekly Wages for Selected Years
Source: Finis Welch (1999, Table 4, p. 7)
YEARS
1993-971988-921977-811967-77
110
90
70
50
30
10
-10
-30
-50
HS Dropouts, White
HS Dropouts, Black
1-3 YRS Coll., White
1-3 YRS Coll., Black
Coll. Grad., White
College Grad., Black
Out of school for less than 10 years
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The circular flow model
• Production for market• Well defined and protected property rights.
The subject of macroeconomics has to do with problems
experienced by industrialized, market
economies.
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What is a market?
A market is an institution that facilitates the exchange
of goods and services for money
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Economic Functions of Government
• Administration of justice• Provision of “public goods”• Correcting for “externalities”
such as air pollution.• Redistribution of income• Economic stabilization
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Arkansas State Revenues by Source, 2009
$16,199.7 (Millions)
Source: www.state.ar.us/dfa
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Arkansas State Expenditures, by Category, 2009
Source: www.state.ar.us/dfa
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The Global Economy
The world is more “integrated” than ever before, as measured by the movement of
resources, goods and services between
countries
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Distribution of global production
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Energy Sources in the World Economy
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Energy Sources in the World Economy
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Energy Sources in the World Economy
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