Quiz 2: The Economy: Myth and Reality
The biggest national economy on earth The Economy of the United States of America is the biggest national economy in the world. The well-known reasons for its growth are human resources and productivity. The U.S. is the third most populous country in the world where India and China have a higher mass of population and rank in the first and second place, respectively. In spite of having a large labor force and higher per capita income, other economies could not reach the level of growth as the US economy. The reasons behind this are as follows: • The level of working population produces a high level of output. Hence, it is phenomenal that the Americans' productivity is higher than other economies. • Thus, the productivity of every 50 states in the economy in the US contributes a high ratio that makes the US economy achieve the highest place among the world countries. • The U.S. has a highly skilled group of labor force. In the background, the US economy has an optimal educational and trained labor force. • The working population in the U.S. is half of their total population while the distribution of demography has more independent class than the working population. • Even though the working population is less, the productivity and the efficiency in production are high. Thus, the per capita incomes are higher than other economies.
Factor of production Factor of production refers to the inputs which are involved in the process of producing the output. The produce can be a good or a service. Hence, a factor of production is simply known as production input. The factors of production are as follows: • Land • Labor • Capital • Organization The most significant factors of production among all the above are Labor and Capital. The amount of output of an economy depends on their inputs. The amount of input given accelerates the amount of output in a certain proportion. Sale of land - a factor of production Selling a piece of land near the highway for opening a restaurant is the sale of a factor of production.
Per capita income The per capita income refers to the total income of the economy divided by the total population of the economy. Per capita income of Connecticut is double that of New Mexico The US economy has 50 different states with different sets of resources and demographic profiles. Certainly, all those 50 states are not equal by means of wealth, natural resources, and human resources. The following table exhibits the data on GDP, population, and per capita income of Connecticut and New Mexico. GDP, Population, and Per capita ratio of Connecticut and New Mexico Source: www.bea.gov. Data as on 2010. A country's per capita income would be more than that of another country, because of having either a higher GDP or lower population than the other country. From the above table, it is observed that Connecticut's GDP is triple that of New Mexico's. Though Connecticut has more population than New Mexico, the relative difference in population between the two countries is low. Hence, Connecticut's per capita income is double that of New Mexico.