Money behind us.

What is behind the money we spent every day? In the book Naked Economics written by Charles Wheelan. This book talked the basics of economics with a clear understanding, and examples of success and fails of the economy, also about what are the markets and how do the markets work, and also the roles of the government and how does it affect the economy.

In the first chapter of the book begins with a question of who feeds Paris? It first started talking about the markets and how powerful it influenced us. For example, the market price allocates the resources and how scarce the resources are and how markets are self-correcting. In the book, it gave examples of success in the economy and fails in the economy. For instance, the fail of the Soviet socialist economy caused by the bureaucracy of the government controlled the economy. Bad economics is imposed on inferences preferences on an individual who has a different life compared to the rest of the majority.  An example of good economics is that the Coca-Cola company in 1989 had a really bad result, but at the end of 1995 the results were extremely good. Later on, Coke was famous. “We just shaped our hands like the bottle, and people understand.” (3) Douglas Ivester, head of the Coca-Cola and later CEO, he made a decision, to give out free coke to everyone. This is an advertising strategy because everyone knew what it was and what it tasted like and people would buy it. This is the power of the markets.

Why do people kill black rhino? For the same reason they sell drugs or cheat their taxes.” (30) In this quote, it basically is a reason of incentives matter. Black rhinoceros are endangered, because of the black markets started to raise the price of a rhinoceros and correspondingly it makes a vicious cycle. The idea behind this is that the scarcity of resources would affect the value of the resource and that is why a black rhinoceros are endangered because hunters would hunt down them and sell it to the market and make huge money by it. In a result, black rhinoceros are endangered.

The roles of government and how does it affects us as a consumer of the economy. First, the government should not be the only provide a good or service if there is a decent reason to think that the individual part will fail in that role. The government will only be allowed to take attention to things that need to be certainly run by the government. There are things that the government should not be doing because when it arrangements with that, it will be uneconomical and not worth it. The government plays a character, but in the U.S. it is a capitalist society, it is mostly the large and small businesses that control the economy.  Even if the government creates plans and makes a lot of key choices, it is the people they govern that control the economy in the extensive course. They decide to buy, sell, invest, and volunteer and that maintenances the economy.

In conclusion, the economy impacts us in a variety of ways, for example, the global economy, interest and rates, taxation, and inflation. In the book, Naked Economics gives a deeper understanding of the economy and the money behind us, the big power of economics. Also, what character does the government plays behind us and how it impacts us in a positive or a negative way.

 

 

About angela.yu

I am Angela.
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