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SIU ECON 240 - The Global Economy and Local Government
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ECON 240 1st Edition Lecture 3Outline of Last Lecture I.(Continuation of factors of production) a.i.Capital a.ii.EntrepreneurshipII.For Whom Do We Produce?a.Factors of production are paid incomes:b.Functional distributionc.Personal distributionIII.The Global EconomyOutline of Current Lecture II.The Global Economy a.Physical Capital Differencesa.i.The physical capital differences on advanced economy from a developing economyb.Human Capital Differencesb.i.Human capital differences between advanced economies and developingeconomies III.Circular Flow ModelIV.Households and Firmsa.Households – individuals or people living together as a decision making unit b.Firms – Institutions that organize production of goods and services V.Marketsa.Goods markets are markets in which goods and services are bought and soldb.Factor markets are markets in which factories of product are bought and sold VI.Real Flows a.In factor markets:b.In goods market:VII.Money FlowsVIII.Government in the Circular Flow a.Federal government expendituresb.Federal government revenue c.National Debt – Total amount government has borrowed to make expenditures that exceed tax revenue to run a government budget deficitThese notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.d.State and Local governments expenditures and revenueThese notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.IX.Circular flow in the Global economy Current LecturePhysical Capital Differences- The physical capital differences on advanced economy from a developing economy: Transportation system – advanced economies are more developed  Technologies used on farms and factories – advanced economies use more capital – intensive economies- The human capital differences between advanced economies and developing economies Education, on the job training and experience Physical ability and state of health Circular flow model is a model of economy - Simplest form of economyHouseholds and Firms - Households – individuals or people living together as decision making unit - Firms – Institutions that organize production of goods and services Markets- Any arrangement that brings buyers and sellers together and enables them to get info and do business with each otherThese notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.- Goods markets are markets in which goods and services are bought and sold Factories Walmart- Factor markets are markets in which factors of product are bought and sold Stock exchange  Labor market Real estate Real Flows- In factor markets: Households supply factors of production Firms hire factors of production- In good markets:  Firms supply goods and services produced Households buy goods and services Money Flows- Firms pay households incomes for services of factors of production- Households par firms for the goods and services they buy Government in the Circular Flow- Households and firms pay taxes and receive transfers - Government buy goods and services from firms Federal Government Expenditures in 2010▪ Medicare and Medicaid 24%▪ Social Security benefits 20%▪ National defense and homeland security 20%▪ Interest on national debt 6% Federal Government Revenue in 2010▪ Personal income taxes 41%▪ Social security 20%▪ Other taxes 10% National debt – total amount government has borrowed to make expenditures that exceed tax revenue to run a government budget deficit  State and Local Government Expenditures and Revenue (2007 – 2008)▪ Education 34%▪ Public welfare benefits 17%▪ Highways 6%Circular Flows in the Global Economy- Households and firms the U.S. economy interact with households and firms in other economies in 2 main ways:  They buy and sell goods and


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SIU ECON 240 - The Global Economy and Local Government

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