Chapter 19: The American Economy

The American Economy

• LG 51
• Ismoilov Islombek

Section 1: Economic Resources

• Section 1: Economic Resources
• Producing Goods and Services:
• *Goods- tangible products like books and automobiles that we use to satisfy our needs and wants.
• *Services- work that is performed for someone else, such as a beautician, mechanic.

• Factors of Production (4 types)- resources necessary to produce goods and services.

1st Factor of Production:

• 1st Factor of Production:
• *Natural Resources- refers to all of the “gifts of nature” that make production possible. (fertile fields, abundant rainfall, forests, mineral deposits, etc.)

2nd Factor of Production:

• 2nd Factor of Production:
• *Labor- the nation’s labor force or human resources. Labor refers to both physical and mental efforts that people contribute to the production of goods and services.

3rd Factor of Production:

• 3rd Factor of Production:
• *Capital
• *Capital- also called capital goods. They are the tools, machinery, and buildings used to make other products.
• -Capital goods are unique in that they are a result of production.
• -Economists differentiate capital goods from consumer goods.
• *Consumer goods are things like clothes, clocks, shoes, foods, bicycles, and radios.
• -Capital goods satisfy wants indirectly by aiding production of consumer goods.

4th Factor of Production:

• 4th Factor of Production:
• *Entrepreneurs are individuals who start new businesses, introduce new products, and improve management techniques.

• Gross Domestic Product
• *GDP- the total value, in dollars, of all the final goods and services produced in a country during a single year.
• -A *final good- is a good, such as a loaf of bread, sold to the user.
• -The *intermediate goods- are the goods that go into the making of a loaf of bread, (flour or wheat, sugar, honey) are not counted in GDP.
• -When computing GDP, economists count only final goods and services.
• -If they counted both final and intermediate goods; they would be double-counting, or counting a good more than once.
• -Second hand sales - the sale of used goods- are not counted as part of the GDP as well.
• -Only the original sale is included in GDP.

• Gross Domestic Product