Economics Discussion Essay

Economics explains how to distribute limited resources over our unlimited wants. Scarcity has the meaning that there aren't enough goods or resources in the world to satisfy everyone’s needs and wants. While shortage supports that definition because shortage is when the markets reach past equilibrium, and demand exceeds supply. Economics help markets by balancing supply and demand ratio and determine the price of the resource.
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Find the changes in Consumer Price Index for the past three years. Discuss your findings and identify your source.
The Consumer Price Index is a “program produces monthly data on changes in the prices paid by urban consumers for a representative basket of goods and services.” Individual prices go up and down by differing percentages. The Bureau of Labor Statistics created a solution which is called a fixed market basket index. For example, gasoline and the oil industry. Gasoline prices increased 26.4%, bringing prices at the pump to a level 5.0% below the record high of June 2008. This increase followed an 18.9% gain in the 12 months to June 2011. The chart below shows a how the gasoline prices of increased and decreased over the years since 2006. I have gotten all information off the Bureau of Labor Statistics website (http://www.bls.gov/cpi/).
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According to the Keynesian Model, there are two components of consumption spending which are autonomous consumption and marginal propensity to consume. The autonomous consumption is the minimum level of consumption that would still exist even if a consumer doesn’t have an income, which since it isn’t dependent on the income, it has no affect. The other component, marginal propensity to consume represents the proportion of an aggregate raise in pay that is spent on the consumption of goods and services instead of saving. This means that for every dollar that income increases, consumption spending will increase....