Unlock document.
This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
Chapter 2/The Economy: Myth and Reality
CHAPTER 2
THE ECONOMY: MYTH AND REALITY
DISCUSSION QUESTIONS
1. Which is the biggest national economy on earth? Why has it remained bigger than
other countries with much larger labor forces or those with higher per capita
incomes?
The United States is the country with the largest economy in the world. The relatively
2. What is meant by a “factor of production”? Have you ever sold any on a market?
A factor of production, or input, is something that is used to produce a finished good
3. Why do you think per capita income in Connecticut is nearly double that in New
Mexico?
There are several possible answers to this question—the question is designed to get
students to think about these differences before using models. One straightforward
4. Roughly speaking, what fraction of U.S. labor works in factories? In service
businesses? In government?
5. Most American businesses are small, but most of the output is produced by large
businesses. That sounds paradoxical. How can it be true?
While there are many small businesses in the U.S. economy, the value of what they
produce is relatively small. For example, a local grocer cannot produce the same amount
6. What is the role of government in a mixed economy?
The government is a referee—it enforces laws and establishes order. The government is a
business regulator—it imposes restrictions on businesses on society’s behalf. The
