Business in A Global Society

1. What is the history of our economic development and what does it tell us about the future?

The United States has maintained its status as the world’s economic leader by continuously using innovative technology to become more productive. We see this every day of our lives, how all the businesses in the world try to keep up with the up and coming technology. The main purpose for this is to always make their business more efficient and productive, no matter what industry they’re in. Businesses have to keep up with new technology in order to be competitive with each other. If they fall behind even the slightest bit, their competitors and customers will notice. In today’s economy it is not easy to keep up with the ever-growing technology industry; businesses have to invest a lot of their funds in this category.

The example that our text gives is the Agricultural Industry. Our book points out that 33 percent of the population use to be farmers and that has now dropped to less than 2 percent. There also use to be about 5.7 million farms and now there are less than 2 million today. This industry has been greatly affected by technological advancements. Although this might seem like a negative impact on our economy due to the loss of jobs it’s not, farmers who lost their jobs went to work in factories. Since technology affects all industries, the manufacturing industry was also affected by the use of technology making the industry more productive and eliminating jobs. Again this might seem like something negative, but as farmers found jobs in factories, the factory workers would find jobs in another industry. As long as the productivity and efficiency created by technology continuously creates wealth, then this will in turn create new jobs in another/different places.

This is an ongoing cycle that we have seemed to become use to. As new technology approaches us, we will attend training and we will adapt to it. If our present jobs are replaced with technology will train and educate ourselves in a new field, as we’ve done in the past.

2. What are the key terms that describe the United States economic system? Discuss the importance of both monetary and fiscal policy.

Our text tells us that three of the major indicators of our economic condition are 1) Gross Domestic Product, 2) The Unemployment Rate and 3) The Price Indexes.

The definition of Gross Domestic Product (GDP) is the total value of goods and services produced in a country in a given year. The companies included in the GDP must be located within the country’s boundaries, although the company may be foreign owned. A company’s revenue will be included in the country’s GDP, where the revenue was generated. Revenue will not be included in the countries GDP where the products where only produced. A nation’s economy is based on its GDP. It should be taken into account that when a nation’s economic growth is measured by its GDP; illegal activities are not accounted for.

The Unemployment Rate is defined as the number of civilians at least 16 years old who are unemployed and tried to find a job within the prior four weeks. The unemployment rate is considered good if it is below 5 percent. The US unemployment rate was at its lowest in 2000 at 3.9%; by April of 2002 it jumped to 6%. There are four types of unemployment frictional, structural, cyclical, and seasonal. Frictional refers to people who have quit work because they hate their boss or they didn’t like their job, also people who are entering the labor force for the first time. Structural refers to unemployment caused by the layoffs (“restructuring”), the mismatch of employee skills with employer requirements of available jobs. Cyclical occurs because of a recession or a similar downturn, this is the most serious type of unemployment. Seasonal occurs where demand for labor varies over the year, for example construction workers, depending on where they are located, can’t work sometimes due to weather conditions. Due to these various reasons there will always be some unemployment.

The Price Indexes – The Consumer Price Index consists of monthly statistics that measure the pace of inflation or deflation. The costs of about 400