To understand the U.S. economy structure, one must be familiar with how households, business and government interact with each other, as well as understand four economic variables: gross domestic product (GDP), inflation rate, unemployment rate, and interest rate.
The U.S. economy is composed of three major institutions: households, business and government. Americans makes economic decisions everyday, whether they are aware of it or not. Households, business and government economics are intertwined in the U.S. economic systems. Whatever one these economic institution does, affects another.
Although the power of households financial and economic decisions might be seen as minimal compared to those of major business, households play a large part of the economy. Households control supply and demand of goods and services in a very specific way form businesses and from the government. When households demands a service, business create services that meet the household’s needs. When households and business begin to interact in an economic manner, the government also becomes a part of the interaction (Colander, 2010).
A simple example we can use on how households, business and government interact in an economy is airlines and airports. It first starts with the consumer having the need to travel from point “A” to point “B” (or from a country to another country); the consumer needs becomes a business idea, hence airlines and airports. Then airlines and airports need government assistance to keep passengers safe and this is where government agencies such as the Transportation Security Administration (TSA) comes into place, as the TSA is a entity of the U.S. Department of Transportation (DOT).
However, from an economic standpoint, households are considered to be supplier of labor for business to produce goods and services and then for the government to control and