Germany is referred to as a “social” market economy and remains a key member of Europe’s economic, political and defense organizations. Like a free market economy, a social market is an economic system in which the supply of and demand for goods and services are left to the individual decisions of buyers and sellers. In addition to this, an attempt is made to prevent restraints on competition resulting from monopolies and cartels. Since Germany is a market economy, the three economic questions are answered almost the same was as we in the United States answer them. The consumers of Germany answer the three economic questions by what they buy and don’t buy.
Given that Germany is known as a large exporting nation, many kinds of goods are produced there. A large amount of what they export is made up of vehicles, chemicals, machinery, metals & manufactures, foodstuffs and textiles. They also have a large agricultural industry with products such as potatoes, wheat, barley, sugar beets, fruit, cabbages, cattle, pigs and poultry. Germany is also among the world’s largest and most technologically advanced produces of iron, steel, coal, cement, chemicals, machinery, vehicles, machine tools, electronics, food and beverages. They make an estimated 506 billion dollars every year in exports and spend 472 billion on imports. The current inflation rate in Germany is around 2.4% and the unemployment rate is 9.4%. Income is measured as the value of an economy's gross domestic product divided by its population. The purchasing power parity was an estimated 2.2 trillion dollars with parity per capita of $26, 200; the growth rate of GDP was 3% from 2000 to 2001.
The condition of scarcity is universal. Every country around the world is faced with the realities of having unlimited wants for goods and services but having only limited resources with which to try to satisfy those wants. Germany has little raw materials and energy and therefore is dependent upon imports. Two thirds of its energy must be purchased from other countries. Its dependence on minerals from abroad is also extreme. One main economic problem is the way stores are made to run in Germany. A store, by law, has to close extremely early on Saturday and not open at all on Sunday. Business owners have to turn away customers in order to close on time and this makes a lot of people very angry. This leads into the problem of labor. It has been noted that the fertility rate has declined, the population has aged, and there is a high rate of unemployment, worrying the country about who will take over the businesses.
In Germany, there is an estimated population of 82,797,400 people and a very broad middle class has emerged. The majority of the working class makes just enough money to live on their labor and only a small amount of people can live off of their assets without extra work. However, the total value of financial assets in households has tripled since 1980. Germany has not been able to avoid worldwide inflation entirely in recent years. In the 1970’s, the cost of living rose by more than six percent per year. It then fell the other way in 1986 for the first time in thirty years and the cost of living was lower than it had been in the same month of the previous year. Prices fluctuated strongly and were represented by the price changes in oil.
I think that, economically, Germany is doing well other than a few scarcities. Because they are the third leading economy in the world, they rank up there with the U.S. and France. Germany has a few shortages in labor and energy, but overall they succeed in exports and GDP growth. Germany is an economy not much different than our own. Besides both being defined as market economies, Germany and the U.S. also share the same periods of business cycle changes. They both experienced the Great Depression in the 1920’s and ‘30s and are even witnessing a recession now. I would agree that an economy is just like a business. An economy goes through the same downfalls and good times just like a business, an economy experiences depressions, recessions, recoveries and prosperities and the goal of an economy is to have a surplus of money while supplying its citizens with needed goods and services.
