National Income and Flow-of-Funds Analysis

By John P. Powelson | Go to book overview

Chapter 3
CAPITAL GOODS AND BUSINESS SAVING

CAPITAL GOODS

In 16C, the residents of Nolandia discovered that it was possible to increase the output of brothausen per man-hour through a device known as an augmentator. An augmentator is a machine with a useful life of several years, made of wood (a product that had hitherto been a useless growth on the face of Nolandia). The Nolandians established a new company, known as the Augmentator Corporation, which would hire labor to cut down trees and manufacture augmentators. This work was begun on January 1, 16C, but the first augmentator could not be ready until December 31, 16C.

Unfortunately, the only laborers available to the Augmentator Corporation were those already employed by the Brot, Hausen, and Distributing Corporations, which were remerged into the Brothausen Corporation in order to simplify the current discussion. The economy of Nolandia was "fully employed"; there was no one without a job. Diversion of labor to the Augmentator Corporation meant that the Brothausen Corporation would produce less consumer goods during 16C. There would be a lean year for households, but the Nolandians were eagerly looking forward to 16D, when the first augmentator would be ready and the output of brothausen would be greatly increased.

The engineers, who were called in to assess the situation, noted that in order to produce a single augmentator, it would be necessary to employ 30% of the factors of production, and only the remaining 70% would be left to produce brothausen. Hence, the output of brothausen would be reduced from $800 in 16B to $560 in 16C.* The scholars were greatly perturbed by this prospect, pointing out that income would be paid to all factors of production, whether they produced augmentators or brothausen. Hence households would receive $800, the same as before. What would happen when they had $800 of income but could buy only $560 worth of brothausen?

____________________
*
Nolandian industry had constant costs in the seventeenth century.

-34-

Notes for this page

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this book

This book has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this book

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this page

Cited page

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited page

Bookmark this page
National Income and Flow-of-Funds Analysis
Table of contents

Table of contents

Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this book

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen
/ 556

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.