The U.S. and Global Economies

A.  The United States produces 20% of world output of goods and services using 5% of the world population.

B.  Resources (land, labor, and capital) are scarce (relative to their unlimited uses) in every country.

C.  The productivity of resources governs their earnings.  Therefore, unskilled labor receives lower wages than skilled labor.  Technologies that produce more output per unit of input are more highly sought after.  Natural resources too are subject to scarcity, competition, and alternative sourcing and usage.  Education is the key ingredient to enhancing one's personal productivity.

 2.3  Describe the macroeconomic performance - standard of living, and economic fluctuations - of the United States and other economies.

Study the Quick Review in the study guide on checkpoint 2.3 on page 24.

Then consider Additional Practice Problem 2.3 on pages 24 and 25 in your study guide.  
(A solution to the Additional Practice Problem 2.3 is on page 25.)

 2.3  Describe the macroeconomic performance - standard of living, and economic fluctuations - of the United States and other economies.

A.  Standard of living is measured in terms of income per person, and can be observed along with unemployment and inflation rates to describe the macroeconomic performance of a country.  Measured in dollars per day, the average American can earn and spend $95 per day,  about 5 times the world average, and about 19 times the $5 per day figure in Africa today.  During the last 20 years, for every 100 persons in the American labor force, about 6 have been unemployed, and that unemployment lasts an average of 15 weeks.  National economies expand at uneven rates, and sometimes contract as last happened in the United States in 1991.

B.  The United States belongs to a group of 28 nations having the most "Advanced Economies" which include about 1 billion people of the 6.1 billion people on earth.  (The world is adding 34 people every 14 seconds; one of those will live in the United States.)

C.  Almost 5 billion people live in the 128 countries known as "Developing Economies."

D.  One-fifth of a billion people live in still another 28 countries called "Transition Economies" including parts of the former Soviet Union.  Inflation has been low in the United States and most of the world, but has been rapid in the transition economies.

Take the optional post-study bonus point quizzes on The U.S. and Global Economies on Saturday following Module 2.

Take the optional pre-study bonus point quizzes on The Economic Problem on Sunday preceding Module 3.

In a new Cato Policy Analysis, economist Richard A. Ippolito argues that without changes, underfunding of private-sector pension plans could lead to a massive taxpayer bailout. To avert an impending crisis, he recommends transforming the Pension Benefit Guaranty Corporation into a private insurance program.

http://www.cato.org/