essential standard 1.00

Essential Standard 1.00

Understand the role of business in the global economy.

1

Objective 1.02

Understand economic conditions

2

• Measuring economic activities• Classifying economic conditions

Topics

3

Measuring Economic Activities

4

Gross Domestic Product (GDP)

• GDP• Major categoriesof GDP

– Individual spending– Business spending– Government spending– Exports & imports

• Name some products or services you have purchased or from which you have received benefits.

• Which component of GDP would you classify the product or service you named?

5

GDP per capita

GDP per capita – output per person

=_________GDP__________Total Population

6

Labor Activities

• Unemployment rate• Productivity means …

– What can help you be more productive in a computer lab?

– What can contribute to employees increasing their production?

7

Consumer SpendingMeasurement of consumer

spending:

• Personal Income

• Retail Sales

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Investment Activities

• The money used for capital projects comes from three main sources:• Personal savings• The stock market• The bond market

• How does each investment activity impact economic growth?

• What are some examples of investment activities?

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Borrowing Activities …

• by– Government – Businesses

• How can government borrowing lead to a budget deficit?

• How can using borrowed money wisely impact businesses?

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Measuring Economic Activities

GDP GDP Per capita

Labor ActivitiesConsumer Spending

Investment Activities

Borrowing Activities

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Classification of Economic Conditions

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ProsperityEmployment rate and demand for products and services are high.

RecessionUnemployment rate is

increasing and demand for products

and services are lowering.

DepressionUnemployment rate is high and demand for products and services is lowering.

RecoveryUnemployment rate is lowering and demand for products and services is increasing.

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Year 1 2 3

Income

Income percent change from year 1

$36,000

n/a

$38,000

5.6%

$21,000

-42%

Gallon of milk cost

Gallon of milk cost percent change from year 1

$2.49

n/a

$2.99

20%

$3.19

28%

Over a three-year period, how has the

income been impacted by the

cost of a gallon of milk?

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Consumer Prices

• Inflation • Causes of inflation• Consumer Price Index (CPI) • Deflation• Causes of deflation

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Interest Rates

• Types:– Prime rate– Discount rate– T-bill rate– Treasury bond rate– Mortgage rate– Corporate bond rate– Certificate of deposit rate

What is the primary purpose of each?

• How do interest rates impact businesses?

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