The basic concepts of economics apply to the relationship between money and happiness to increase wealth with available resources. For instance, a college education increases human capital when students embrace basic economic principles and apply them in analyzing economic factors in life. This is evident when students gain experience of handling economic concepts as citizens by applying the knowledge to contribute to the nation’s wealth.
The capital increases when such students are in a position to enhance capital formation, control prices, income distribution, spending and ability to save. In addition, the college education provides knowledge on marginal benefits and costs, which enables students to make decisions as citizens. Education contributes to increase of capital in that students learn to enhance their marginal benefits to be greater or equal contrasted to the marginal costs. In education, marginal costs apply to aspects such as tuition, value of time, and books expenses. Through college education, individuals learn to differentiate between macroeconomics and microeconomics, hence increasing human capital. Macroeconomics handles aspects that relate to the entire economy. It involves concepts such as interest rates, unemployment rates, inflation rates, and dealing with budget, and economic growth. This can bring money and happiness in the society after students learn and discover the relevance of these economic concepts in society, thus it contributes to increasing human capital (Rowley, 2005).
On the other hand, microeconomics incorporates concepts that relate to small components in the economy. College education provides students with skills about demand and supply of services and goods, production, price elasticity, profit maximization and cost functions. The capability of students to apply such economic concepts increases capital and contributes to money and happiness. In matters that concern production possibilities curves, a nation’s curve can shift inward when a state fails to utilize its resources such as land, capital, raw materials and labor efficiently. A production possibility curve reveals the outcome of production produced with given resources amount. The curve of a country can shift inwards when a country fails to utilize its resources efficiently. For instance, the issue of unemployment perfectly explains this situation: a nation with stable production, capital, and raw materials can lag behind when its citizens lack jobs. The fact that raw materials, capital and production run efficiently, the unemployment aspect causes the curve to shift inwards. This further denies the nation the ability to achieve money, and happiness when job opportunities decreases.
In this case, such a shift occurs if existing technology and resources remain constant and act as a barrier to the output increase. Recent research of economists concluded that resources contribute to the shift of the curve inwards, which reflects scarcity at a given point and limits production. The shift of the curve inwards also indicates that the production of the output combination incorporated fewer of the available resources such as unemployment. This situation can also occur when in some circumstances, resources are available, but the country utilizes them inefficiently especially in the case of underemployment. Technology also contributes to shift of the curve inwards; this is evident when a country has plenty of resources, but lack people with skills in matters that concern production and distribution. This further hinders the production process when technology is not efficient to utilize the existing resources, therefore obstructs happiness and money.
Technology advancement is evident when there are improvements and interventions to produce goods and services. This takes place when entrepreneurs develop incentives of producing goods efficiently at a lower cost. If lower costs result in high profits, it motivates entrepreneurs to boost their process of production and prevent the curve from shifting inwards. Technology growth plays a significant role in avoiding the curve to shift inwards, and this is evident when the nation allows entrepreneurs to stimulate growth in economics. If individuals become more technologically advanced and productive, the situation is averted and the curve shifts inwards.
The statement: “The U.S. economy could achieve greater growth by devoting fewer resources to consumption and more to investment; it follows that such a shift would be desirable.” This implies that the citizens will experience reasonable taxation levels that will protect consumers, workers and safeguard financial and economic stability in the country. This will also motivate enterprenurers to improve on the production process through innovation, hard work and creativity. Investing a lot of resources will save the economy in contributing more of their earnings to the government, and spending on consumption. Through investments, the country’s economy will embrace innovation and new ideas for development. If US concentrates on investments rather than consumption, it can result in minimum corruption in the country. This avoids cases where the government takes away the private property of citizens, and hinders ways for hardworking workers to accumulate and produce wealth (Frank, 2007).
Investment is also a desirable shift in the US economy because it leads to a stable price level, free international trades and markets. This will also boost free markets incorporating the private sectors in production of goods and services in the country. For investment to take place effectively, there should be proper security in the country to protect citizens and motivate them to increase on their productivity. In addition, if the US government spends money on investments, it will enhance regulations on safety of workers, resultantly unemployment compensation is increased. Devoting more efforts to investments than consumption amounts in a high standard of living in the society because an increase in investments creates an abundance of job opportunities. As such, production of products is augmented, thus promoting financial increase and happiness in the US society.
“By 1993, nations in the European Union (EU) had eliminated all barriers to the flow of goods, services, labor, and capital across their borders. Even such things as consumer protection laws and the types of plugs required to plug in appliances have been standardized to ensure that there will be no barriers to trade.” In my opinion, this elimination of trade barriers affected EU output in a sense that, it allowed free markets in the country which has led to income inequality. This is especially evident when innovative and productive workers earned a high income than the rest. This situation also leads to free issue of public goods that made it hard for the private sector to engage in business. This further facilitated the private trades to under-allocate resources that are relative to the needs of the public.
The problems that arise are that these trade barriers made some people in the EU society avoid contributing taxes in the government. The elimination of trade barriers in some circumstances made the government interfere with the free market traders. This was by causing inefficiencies through shortages, resource misallocations, surpluses and resource malinvestiment. Furthermore, it also made the government increase their taxation rates by levying income too much causing a negative impact to the public. For instance, it made individuals lose their incentives to produce, create jobs, innovate and work hard. This also denied the public happiness and access to money due to increase in income redistribution leading to low living standards. As a result, the elimination of trade barriers made the European Union lag behind in the economy by failing to initiate rules to protect the business in the country.