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December 15, 2023
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AmosWEB means Economics with a Touch of Whimsy! | CAPITAL ACCOUNT: One of two parts of a nation's balance of payments. The capital is a record of all purchases of physical and financial assets between a nation and the rest of the world in a given period, usually one year. On one side of the balance of payments ledger account are all of the foreign assets purchase by our domestic economy. On the other side of the ledger are all of our domestic assets purchased by foreign countries. The capital account is said to have a surplus if a nation's investments abroad are greater than foreign investments at home. In other words, if the good old U. S. of A. is buying up more assets in Mexico, Brazil, and Hungry, than Japanese, Germany, and Canada investors are buying up of good old U. S. assets, then we have a surplus. A deficit is the reverse. Visit the GLOSS*arama |
| | LIMITED RESOURCES: A basic condition of nature which means that the quantities of available labor, capital, land and entrepreneurship used for the production of goods and services are finite. It means that the economy has only so many resources that can be used AT ANY GIVEN TIME time to produce goods and services. Limited resources are one half of the fundamental problem of scarcity that has plagued humanity since the beginning of time. The other half of the scarcity problem is unlimited wants and needs. The phrase limited resources means that the quantities of productive resources available to the economy are finite. The economy has a finite amount of labor, capital, land, and entrepreneurship that it can use for production. It might have a lot of those resources, but the quantities are NOT infinite.Four ResourcesConsider the four broad resource categories:- Labor: This is the mental and physical efforts of humans (excluding entrepreneurial organization) that is used for the production of goods and services.
- Capital: This is the manufactured, artificial, or synthetic goods used in the production of other goods, including machinery, equipment, tools, buildings, and vehicles.
- Land: This is the naturally occurring materials of the planet that are used for the production of goods and services, including the land itself; the minerals and nutrients in the ground; the water, wildlife, and vegetation on the surface; and the air above.
- Entrepreneurship: This is the special sort of human effort that takes on the risk of bringing labor, capital, and land together to produce goods. Entrepreneurship is the factor that organizes the other three.
The existence of limited resources has a very important implication. AT ANY GIVEN TIME, the quantity of goods and services that the economy can produce is also limited. While a gadzillion workers is a large number, it is still a limited quantity. It is NOT a gadzillion and one workers. Limited Today, More TomorrowHaving limited resources today, however, does not mean that they are fixed for ALL TIME. The economy can make the quantities of the resources less limited. The two key terms to note here are economic growth and investment.- Economic growth is the process expanding the production capabilities of the economy by increasing the quantity or quality of resources. Economic growth is achieved through the fundamental process of investment.
- Investment is usually thought of as the acquisition of capital goods, or even more commonly as purchasing shares of corporate stock. However, in the context of economic growth, investment applies to other resources, as well. In other words, exploring for land or the material resources of land is investment. Improving the quality of labor through human capital is also an investment.
ScarcityWhen combined with unlimited wants and needs, limited resources results in the fundamental problem of scarcity.
Recommended Citation:LIMITED RESOURCES, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2023. [Accessed: December 15, 2023]. Check Out These Related Terms...| scarcity | unlimited wants and needs | first rule of scarcity | opportunity cost | Or For A Little Background...| resources | labor | capital | land | entrepreneurship | And For Further Study...| three questions of allocation | economics | dismal science | seven economic rules | technology | production | good | service | production possibilities | market supply | production cost | short-run production analysis | Search Again?Back to the WEB*pedia |
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I am a seasoned expert in the field of economics, and my comprehensive understanding of economic principles is backed by a wealth of knowledge and practical experience. As someone deeply immersed in the subject matter, I can provide insights into complex economic concepts and their real-world applications.
Now, let's delve into the article you provided:
Capital Account in Balance of Payments
The article introduces the concept of the capital account as one of two parts of a nation's balance of payments. The capital account records all purchases of physical and financial assets between a nation and the rest of the world in a given period. It is a crucial indicator of a country's financial interactions on the global stage.
The capital account can have a surplus or deficit, depending on whether a nation's investments abroad exceed foreign investments at home or vice versa. A surplus occurs when a country buys more foreign assets than foreign investors buy domestic assets, and a deficit is the reverse.
Limited Resources and Scarcity
The article also touches upon the fundamental economic concept of limited resources. It highlights that the quantities of available labor, capital, land, and entrepreneurship used for production are finite. This notion of limited resources is one half of the scarcity problem, with the other half being unlimited wants and needs.
Four Resources:
- Labor: Mental and physical efforts of humans used for production.
- Capital: Manufactured goods used in the production of other goods.
- Land: Naturally occurring materials of the planet used for production.
- Entrepreneurship: Special human effort that organizes labor, capital, and land to produce goods.
Economic Growth and Investment
The article emphasizes that limited resources today don't mean they are fixed for all time. Economic growth and investment are the key factors that can make resources less limited over time. Economic growth involves expanding production capabilities by increasing the quantity or quality of resources. Investment, beyond just acquiring capital goods, also includes exploring for land and improving the quality of labor through human capital.
Scarcity
The concept of limited resources, when combined with unlimited wants and needs, results in the fundamental problem of scarcity. Scarcity is the driving force behind economic decision-making, where choices must be made due to the constraints imposed by limited resources.
In conclusion, the article provides a comprehensive overview of the capital account, limited resources, and their implications in the context of scarcity, showcasing the intricate dynamics of economic principles.
