Written Assignment

1. Consumer sovereignty is the authority of consumers to determine what is produced through their purchases of goods and services and that dictates what goods and services will be produced. The consumer receives the goods and services.
2. The private sector is made up of households, business firms, and the international firms and consumers. The public sector refers to activity by the various levels of government. Households are one or more persons occupying a unit of housing. A business firm is a business organization controlled by a single management. The international sector is foreign buyers and sellers who have a significant effect on economic conditions in the U.S. The Government sector (Public) is all of the government entities from federal, state, and local. All of the government’s activities could potentially affect individuals. The public sector spends the most and the private sector spends the least. The group that is volatile is the households in the private sector. The reason for this is that the consumers ultimately decide what goods and services they will use or purchase.
3. The term trade deficit means that we import more in our country than export. It is said to be negative because we have purchased more goods than we have exported or sold so our budget is negative.
4. Country A net exports is 9 million Country B net exports is -3million and County C net exports are -6 million Country A has a trade surplus and Countries B and C have trade deficits.
5. A sole proprietorship is owned by one person. This type of business may be a one person operation or a large enterprise with many employees. The owner receives all the profits and is responsible for all the debts incurred by the business. Two advantages to this are the sole person would receive all the profits and also you wouldn’t have to deal with a business partner or partners. Two disadvantages to this type of business would be if it failed then you would be the sole responsible person who would lose everything and you wouldn’t have business partners who could help by investing more money into the business. A partnership is a business owned by two or more partners who share both the profits of the business but also the responsibility for the business loss. Two advantages are there are others involved in your partnership that can help you with survival strategies or investments and also if you wanted to leave the business then you would have partners to rely on. Two disadvantages are you would have to always have a good relationship with the partner or partners so that could be tough if you disagreed. Also, you may not make enough profit because you have to share it with your partner. A corporation is a legal entity owned by shareholders whose liability for the firm’s losses is limited to the value of the stock they own. Two advantages are the shareholders’ liability is limited to the stock that they own and if the corporation cannot pay its bill then the creditors cannot have access to the shareholders personal wealth. Two disadvantages are if the corporation folded then you would lose your portion of the stock and also you are limited to the amount of profits according to your shares. A multinational business is a firm that owns and operates producing units in foreign countries. Two advantages to this type of business would be that your profits would be phenomenal when business was good because of being located all over the world and the advances in technology help the ability to keep expanding these multinational businesses. Two disadvantages would be you would have to compete with the global market and you would stand to lose a lot of income if your business closed or was suffering losses.
6. The country that was exporting the DVD players to us would benefit. They would benefit because they would be able to inflate their prices because of the restrictions on imports in our country. Our country would be harmed because we would have fewer of And the price would be much higher.
8. The circular flow diagram illustrates how the main sectors of an economy fit together.
9. It is the most common measure of a nation’s output and is the market value of all final goods and services produced in a year within a country’s border. An increase in gross domestic product would affect me by prices rising for the goods and services I purchase.
10. Disposable personal income is personal income minus personal taxes. It is more important than Gross Domestic Product because this is a true figure at what we have to save or spend.
11. Nominal GDP measures output in terms of its current dollar value. Real GDP measures output in constant prices.
12. Because it measure the average price of consumer goods and services that a typical household purchases. I may not fall in the average for this statistic.
13. The price of goods and services will go up.
14. A currency appreciates in value when its value rises in relation to another currency. When currency appreciates the countries international demand for its exports decrease. A currency depreciates in value when its value fall in relation to another currency. When currency depreciates its exports become cheaper and the demand from other countries increases.
15. A. $620.00 B. $14,440.00 C. $464.00 D. $276.00