question
Trends in the U.S. agriculture.
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-Farm population and labor force has declined
-Farms have become bigger
-Acreage seems to be stabilizing
-Yield per acre is increasing
-Real price and real value of agricultural products declining
-Share of agriculture in GDP has declined
-Farms have become bigger
-Acreage seems to be stabilizing
-Yield per acre is increasing
-Real price and real value of agricultural products declining
-Share of agriculture in GDP has declined
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Concept of family farming.
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defined as one in which the farm family constitutes the basic labor force.
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What is GDP?
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Total value of final goods and services produced within the United States in a given period of time by either foreign or domestic resources.
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What is GNP?
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Total value of all finished goods and services produced in the economy of a country in a given time period by all businesses headquartered in this country whether these goods and services were produced in the United States or overseas.
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Agriculture
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Not a homogeneous sector/industry
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Agriculture consists of
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small family farms, large corporations, credit, and input supply firms, marketing and processing firms, transportation networks, wholesalers, restaurants, food & fiber retailers.
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Family farms are incorporated for three reasons:
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-A corporate form of organization can be used to transfer farms to others at a lower cost than other forms of business organization
-Employee benefits such as social security and unemployment insurance are tax-deductible for the corporation, but not an individual proprietorship
-A corporation can separate management from ownership in order to reduce the liability of both management and owners
-Employee benefits such as social security and unemployment insurance are tax-deductible for the corporation, but not an individual proprietorship
-A corporation can separate management from ownership in order to reduce the liability of both management and owners
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Vertical integration:
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means that successive production stages and/or marketing stages are coordinated within one farm.
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In a simplified world, there are two markets; what are they?
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Resource Market
Product or Commodity Market Resource Market
Product or Commodity Market Resource Market
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In resource market, we buy and sell ___________
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resources/inputs/factors of production/raw materials.
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In resource market, ________________________. They supply resources like land, labor, capital for production.
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households are on the supply side
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In product market, we buy and sell __________
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commodities or products or final outputs.
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In product market, _____________. They supply or sell final outputs in the market
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producers or businesses are on the supply side
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GDP and GNP are both calculated how many times a year?
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one
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Both ________ are two of the most commonly used measures of a country's economy.
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GDP and GNP
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Income Approach of calculating GDP
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Summing up all the incomes earned in the factor markets including wages and salaries, interest, rents, and profits minus business taxes, capital consumption, and U.S. income earned overseas.
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Expenditure Approach of calculating GDP
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Summing up the value of all purchases made by final consumers (households)
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Monetary Policy
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Influences economic activity in the system through the Government's action in managing the Money Supply (MS) and the Rate of Interest (r)
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Fiscal Policy
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Influences economic activity in the system through Government's action in managing the Government Expenditure(G) and the Taxes (T)
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Recession
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the significant decline in the economic activity that lasts for more that a few months and affects industrial production, employment, real income, and wholesale retail trade
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During recession-
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-Industrial production declines
-Unemployment rate increases
-Real income falls
-Wholesale retail trade fall
-Overall consumption and production/investment in the economy falls which means net demand falls in the economy.
-Unemployment rate increases
-Real income falls
-Wholesale retail trade fall
-Overall consumption and production/investment in the economy falls which means net demand falls in the economy.
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If the economy is suffering from recession, the goal of the government will be to ______________
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implement policies that will increase the demand in the market
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To bring the economy out of the recession the government can take ________________ Policies.
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Expansionary Monetary and Fiscal
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Expansionary Monetary Policy
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Increase Money Supply and decrease the rate of interest.
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Expansionary Fiscal Policy
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Increase Government expenditure and decrease tax rate.
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adopts contractionary Monetary and fiscal policies if the economy is suffering from a _______
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high inflation rate.
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If the economy is suffering from a _________, the government can take Expansionary Fiscal Policies.
answer
recession
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Inflation
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the rate at which the general level of prices for goods and services rise and consequently the purchasing power of the currency falls.
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High inflation rate can be a result of high ___________
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demand for goods and services in the market.
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The government adopts ____________- policies to reduce the overall demand in the market and thereby reduce the inflation rate.
answer
contractionary monetary and fiscal
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Contractionary Monetary Policy
answer
Decrease Money Supply and increase the rate of interest.
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Contractionary Fiscal Policy
answer
Decrease Government expenditure and increase tax rate.
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Real income is the income adjusted to include ________
answer
inflation
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