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Supply And Demand In Florence

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Supply and demand for goods play a critical role throughout world economies. They are perhaps the primary building blocks of any economy. Several hundred years ago, supply and demand were no less important, and were particularly instrumental in the economic recovery of Florence during the fifteenth and sixteenth centuries. The ability of a group of notable people to provide the supply of goods in response to demand in Florence provided the foundation for the flourishing of art, commerce, and living standards. In their own ways, both Michelangelo and the Medici family contributed to the economic recovery and development of Italy. While Michelangelo may have represented only one of a slew of notable artists …show more content…

2 - 67).

Let us first look at why there was so much money, all of a sudden, so long after the Black Death. In the 1300's and 1400's most of the excessive wealth and money from the reduced populations went into territorial expansion as well as toward military costs. These helped Florence become a thriving city, well-positioned to grow. Then, in the mid to late 1400's, some political order was restored, taxes were cut, and the military expansion was halted. All of the money which had been going to the military could now be spent on the economy. Since taxes were cut significantly, people had a lot more disposable income (Goldthwaite, The Building... 1 - 44). Disposable income is defined as all of the money after taxes that can be either spent or saved by the people. All of this excess money could therefore be spent on extra consumer goods and public works (Baumol and Blinder 592). It was at this time that beautiful buildings began to spring up throughout Florence. The Medici family sponsored the architectural design and construction of many elaborate buildings and churches, many of which still exist today. They were among a small number of people who actually had enough money to spend on these very expensive extra goods.

The distribution of wealth in Florentine then was very different from the distribution of income in the United States today. In 1992, the top 5% of

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