How People Make Economic Decisions

The United State economy is built up by three sectors that are households, business, and government. Those sectors are connected with each other; Households provide people and other things to businesses for making the products and services. And businesses pay money back to the people who work for it. Households and businesses’ interaction takes place is called a factor market. After labors made production and services, the businesses sell them back to households and government. When this interaction takes place, it is called goods market. Government also supervises the interaction of business and households in the markets.

Moreover, the United State economy is interconnected with the world economy. Which means U.S. government, businesses, households are interrelated with the world economy. Even though, United State is a democracy country, households vote their governor in this country, but for its economy, it also needs to keep a business’s relationship with other countries. For example, United State has signed international treaties in which it has agreed to limit its domestic actions, such as its ability to tax imports. So households make products to businesses, and then businesses can export products to foreign countries and import foreign products to sell to households and government. In addition, government is limited by taxes money from their business trade.

In addition, when businesses and households make money, they have to pay the tax to the government. Meanwhile government buys products and services from businesses and buys labor services from households. After government taxes money from households and businesses, with some of its tax revenue, it provides services to households and businesses. For example, government needs to spend money to build roads for its citizen and pays the medical fees for the children who are eligible to receive Medi-Cal benefits without a share of cost under the 133% program for children from