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The economy
Q. What is the economy and how does it work?
A. Economy - The sum of all the work performed by humans.
The economy is driven by demand. Business cannot generate profit if no one buys the resulting product.
For the economy as a whole, too little demand results in unemployment.
Too much demand results in inflation.
Having the right demand means balancing the segment of the economy which produces profit with the segment of the economy which does not generate profit.
In an advanced technology driven economy, government has an important role in achieving this balance. Government must exert controls on the money supply to control inflation and ensure sufficient money in the economy to support optimum demand.
Generating Demand by Govenment action
Controlling Inflation with a National Sales Tax
Q. What is a good economy?
A. A good economy is:
Q. What is bad economy?
A. A bad economy is when anyone is doing poorly.
The Extremes:
Q. What is the purpose of economics?
A. Economics is the method by which society organizes the activities of individuals.
Q. How do we grow the economy?
A. The best way to grow the economy is to get everyone working. Low income workers will spend most of their earnings which will provide a market for basic products and services. High income earners will save and invest to provide capital for productivity improvement and new technology. Inflation can be controlled by a variable tax rate to offset excess bidding up of prices from speculation.
Controlling Inflation with a National Sales Tax