Chapter 2

I found that the model introduced in chapter two helped me understand how the economy works in a simple way. I found it very useful in showing me how not only do consumers give money to markets in exchange for goods and services, but also the households also receive money from the market by providing labor, land and capital to help the market to be able to produce the goods and services that in turn the households consume.
We often hear that we should buy products that are American made. I learned in this chapter that countries we trade with are often able to make items for a lower price and they often use materials from us to produce those items. It is beneficial to us to sell the raw material and to buy the finished product for less than we would be able to produce it here. The other country in turn gets the revenue from selling the exports to the United States. These are normative statements because they discuss the facts and do not state what ought to be done.