objective 1.02

Objective 1.02

Understand economic conditions

1

Measuring Economic Activities

2

Gross Domestic Product (GDP)

• GDPis the measurement to determine the country’s overall economic output

(The country’s TOTAL $$ value of goods and services produced in 1 year.)

• Major categories of GDP– Individual spending– Business spending– Government spending– Exports & imports

3

Gross Domestic Product (GDP)

• 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?

Individual spendingBusiness spendingGovernment spendingExports & imports

GDP per capita

GDP per capita means output per person

=_________GDP__________Total Population

5

Labor Activities

• Unemployment ratePercentage of people in the labor forcewithout jobs.

• Productivity means …– What can help you be more productive in a

computer lab?– What can contribute to employees increasing

their production?

6

Consumer SpendingMeasurement of consumer

spending:

• Personal Incomewages, investment income, and government payments

• Retail Salessales of goods and services that indicate spending patterns

7

Investment Activities

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

8

Investment Activities

• Personal Savings- Businesses use money deposited in banks to buy equipment or products.- Savers earn interest on the savings.

• Stock Market- Higher earnings for business increases the business value

- This causes demand for their stock.

• Bond Market- The bond market makes money available for businesses and government to borrow. - Bondholders earn interest on money.

Investment Activities

• How does each investment activity impact economic growth?

Personal SavingsStock MarketBond Market

• What are some examples of investment activities?

Borrowing Activities …

• by– Government – Businesses

• How can government borrowing lead to a budget deficit?

• How can using borrowed money wisely impact businesses?

11

Measuring Economic Activities

GDP GDP Per capita

Labor ActivitiesConsumer Spending

Investment Activities

Borrowing Activities

12