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Fundamentals of Economics
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One of the first questions ever considered in the study of economies was why
the wealth of nations varies so much. Adam Smith, a Scottish moral philosopher,
attempted to describe in his 1776 book The Wealth of Nations the conditions
that enable a country to become wealthy. Since Smith’s time, the topic
has not diminished in importance. It is quite amazing to look around the
world today and see the huge differences in wealth from one nation to
another. A map showing gross domestic product per person (GDP; GDP is
the total value of income created in a nation in a year’s time) is presented in
Figure 1.1. The dark blue countries are the richest, with a per capita GDP
exceeding $30,000, followed by lighter blue, turquoise, and so on up to red,
the poorest nations, with a per capita GDP ranging from zero to $500.
A person in Malawi may have less than $1 a day to live on, while the
average person in the United States has more than $40,000 per year. In 1800
it would have been hard to know whether you were living in Latin America,
North America, or Europe; standards of living were not very different. By
1900, a differential between wealthy and poor nations was being created and
today the differences are huge. According to the United Nations’ Food and
Agriculture Organization, there are over 800 million people in the world who
don’t get enough to eat. Thirty percent of children in Malawi are malnourished,
and more than two of every ten will die before their fifth birthday.
The United States is rich. Even those in poverty in the United States are in
the top 7 percent of all people in the world in terms of wealth. Why haven’t
all nations progressed like the United States has? Canada is also wealthy,
sharing a 2,000-mile border with the United States. Yet, Mexico also shares a
2,000-mile border with the United States, and its standard of living is less than
half of the United States’. How can this be? Let’s begin our study of economics
discussing possible answers to these questions
WILLIAM BOYES and MICHAEL MELVIN - Personal Name
5th Edition
13: 978-1-133-95610-
NONE
Fundamentals of Economics
Economics
English
South-Western, Cengage Learning
2012
1-464
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