Economic Activities

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Submitted By sriverz3
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Economic activities occur continuously. From buying groceries, experiencing massive layoffs, and decreasing taxes everyone is a part of the economic process. These things have an effect on government, business, and households. This analysis is a simplification of a complex process.
Buying Groceries
At first glance buying groceries is a simple task. One goes to the store and makes purchase; returns home and consumes the groceries. This activity involves more than a simple purchase. The government sets the tax rate the grocery is responsible for. The grocer collects that tax from the consumer at time of purchase and forwards it to the government. The government regulates the quality and standards of the product that the grocer purchases from suppliers. The government sets the tax rate the suppliers are responsible for. The suppliers collect these from the grocers and this is also forwarded to the government.
In addition suppliers purchase equipment for use in production, people are employed to produce products, jobs are created transporting products. The purchase of equipment generates jobs in other industries. The purchase of raw materials to produce items generates jobs in additional industries. These businesses pay taxes to the government.
Each individual employed pays taxes on his or her wages. In turn they consume groceries; keeping businesses supplying and producing, and generating jobs. One step in the process leads to the next step. It is a continuous process known as the circular flow. Each economic component whether government, households, or business interacts with the other.
Massive Layoffs
When massive layoffs occur businesses are using layoffs as a means to cut cost. Frontline employees receive little or no increase in wages or hours, yet businesses often report higher earnings due to increase or no change in production levels (Sum and…...

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