assessment review power point

8/9/2019 Assessment Review Power Point

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Economics


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Gross Domestic Product

Final Value of all goods

and services produced bya country during a given

time.


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Gross Domestic Product

Calculated by:

All purchases of

final goods andservices

Consumers

BusinessesGovernments

Net exports


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Real GDP

GDP in current

prices is

converted toinflation-

adjusted GDP


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Inflation

A period ofrising

priceswhen the

purchasing

powerofthe dollaris

falling.


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PerCapital GDP

Dividing Real GDP by

a Countrys Total

Population

GDP/Total Population


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Standard of Living

A measure of the amount of

goods and services available

to citizens.


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Productivity

Output ofgoodsand servicesas

measured per

unit ofinput:

Time

Workers Capital

Resources, etc


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Labor Productivity

The amount the

workforce can

produce inagiven time.


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Chapter 10LaborForces


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Labor Productivity

Rising Labor

productivity means

businesses can payworkers higher

wages without

increasing costs.


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Market Forces

Demand goes

Supply the SameWage rate goes

Demand goes

Supply the sameWage rate goes

Demand the same

Supply goes

Wage rate goes

Demand the same

Supply goes

Wage rate goes


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LaborForce

All people 16years of age

or older whoare currentlyemployed or

looking forwork.


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LaborForce Changes

1- Farm Economy

2- Manufacturing Economy

3- Service Economy


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Salary Differences

Differences inAbility

Differences inEffort or Jobs

Experience

Education and

Training


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Non-market Forces

People stay were they are

Job Discrimination

Government Legislation

Labor Unions


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Chapter 13

Money


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Money

Anything generally

accepted as:

medium ofexchange

store of value measure of value


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The Federal Reserve System

The Nations Banking

SystemCommonly called Fed

12 Federal ReserveBanks


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Fed Functions

Supplies Economy with Cash

Processes checksand EFTs

Holds ReservesforDepositoryInstitutions

Servesasbankerto the Federal

Government Supervises Banks

Regulates the Money Supply


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Deflation

A time when

prices are

falling.


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Demand-pullinflation

Too muchmoney chasingtoo few goods

Demandincreasesfasterthansupplythus causingprices to rise


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Cost-push inflation

A period of

rising prices

due to anincrease in the

cost of

production.


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Those who sufferfrom inflation

People living on

fixed incomes

Savers

Lenders

Business Firms


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Those who benefit from inflation

Those whocan increase

their income

Borrower

1

23


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BusinessCycle

A pattern of

upsand

downsin theeconomy


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Peaks

The economy isbooming.

Business is nearcapacity

Jobs areavailable

Prices areincreasing


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Recession

Two consecutive quarterof

declining real GDP

Lay offofworkers

Reductionin purchases of

raw materials

Reductionin productivity

Usuallylast 6 to 18 months


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Trough

Afterrecession theeconomy willreach itslow

point

Factoriesless than

capacity

Unemployment high levels Weak demand forproducts


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Expansion

Economy

recovering

Business andconsumer

spending

increase Unemployment

declines


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Economic Indicators

Measures of the condition of

the economy


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1. Leading Economic Indicators

Show early signs of recession and

expansions

Average Weekly hours in private non-agricultural industries

More hours worked so more income

for employees

Less hours worked so less income for

employees


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2. Coincident Indicators

Reflect the

current pace of

the economy


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Lagging Indicators

After a change has

occurred in the

economy.

Unemployment

rate


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Seasonal Unemployment

Employees

spend part of the

year in voluntaryunemployment

Ex: waiters at awinter resort.


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Structural Unemployment

Jobsare available but

individuals dont have

the skillsforthe job.

Technology changes

Blue collarjobsunavailable but white

collarjobsare available


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Consumer Price Index

CPI

Measures ofthe price

changes overa period of

time.

Measures price changesinapprox. 400 goods.


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CPI

Food and Beverage Housing

Clothing

Transportation

Medicaland

PersonalCare

Entertainment

Education

Tobacco


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Stabilize the Economy

Fiscal Policy (Government

Taxing and Spending

Monetary Policy (Federal

Reserve controlling the moneysupply)


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Chapter15

International


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Import

To bring or carry in from anoutside source, especially to

bring in (goods or materials)from a foreign country for

trade or sale.


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Export

To send or

transport (a

commodity, forexample)

abroad,

especially fortrade or sale.


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Absolute Advantage

One nation can produce an

item with fewer resources than

another nation can


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Comparative Advantage

The ability to produce an item

at a lower opportunity cost.


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Barriers to International Trade

1. Tariffa duty or tax on importsGoal: Raise money

Goal: Protective tariff to

protect industries.


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2. Quotas restrictions on thenumber of goods that can enter a

country from abroad.


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3. Preservation ofstandards -

Government rules

and regulations onimported goods.

Example: laborpractices


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Balance of Trade

The

difference

between theexports and

import of

merchandise


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Trade Deficit

The excess ofexpenses

incurred in tradeover expected

income ( imports

exceed exports)

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