Intro to Business Chapter 1

Topics: International trade, Inflation, Free trade Pages: 3 (888 words) Published: February 25, 2014
Homework #1
PAQ p.34
3. Adam Smith, who is also considered to be the "father of modern economics," believed that self-interest in one's business and it's profits would trickle down and help the overall community's economy. That is what they called the invisible hand, when one's goal of self-profit actually helps the community. The creation of jobs, and the contribution of your product or service to the community are examples of how a seemingly selfish business move is actually helping others. PAQ p.41

1.The four basic rights of Free-Market Capitalism
1.The right to own private property- to be able to buy and sell land, property and everything on it. 2.The right to own a business and keep all that business's profits- All money earned from the business's actions goes directly to the owner, which means no taxes. 3.The right to freedom of competition-to be able to compete with other people or businesses in selling your product or service. 4.The right to freedom of choice- You can choose what job you want to do and where you want to do it. PAQ p.52

1. To determine how well an economy is doing, we look at the 3 following figures in relation to the United States: Gross Domestic Product (GDP) - In a given year, the total value of the final goods and services produced. The US have a relatively high GDP given that with the amount of input the workers put in we have a lot of output. With the GDP at an estimated $14 trillion dollars, our economy may even be higher with the unaccounted for illegal activities such as the sale of illegal drugs. Unemployment Rate - This is determined by calculating the percent of people 16 or older that have looked to join the work force within the past 4 weeks. The US has a relatively low unemployment rate of a little less than 9%, but that is high compared to our recent low 3.9% in 2000. Inflation and Price Indexes - When the general price of goods and services rise, it is called inflation. If inflation starts to slow it is...
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