Chapter 3 political and economic analysis Section 3

Chapter 3 political and economic analysis Section 3. 1 What Is an Economy? Section 3. 2 Understanding the Economy

Section 3. 2 Understanding the Economy CONNECT How do your actions affect the economy?

Section 3. 2 Understanding the Economy • List the goals of a healthy economy. • Explain how an economy is measured. • Analyze the key phases of the business cycle.

Section 3. 2 Understanding the Economy Aspects of an economy such as consumers, businesses, and governments affect the economy and marketing decisions.

Section 3. 2 Understanding the Economy • productivity • business cycle • gross domestic product (GDP) • expansion • gross national product (GNP) • recession • inflation • depression • consumer price index (CPI) • recovery • producer price index (PPI)

Section 3. 2 Understanding the Economy Identifying Economic Measurements

Section 3. 2 Understanding the Economy Identifying Economic Measurements

Section 3. 2 Understanding the Economy The Economy and Marketing Examples of the Three Goals of a Healthy Economy

Section 3. 2 Understanding the Economy The Economy and Marketing Examples of the Three Goals of a Healthy Economy

Section 3. 2 Understanding the Economy The Economy and Marketing Economic Measurements Labor Productivity productivity Output per worker hour that is measured over a defined period of time.

Section 3. 2 Understanding the Economy The Economy and Marketing Economic Measurements Labor Productivity Gross Domestic Product (GDP) gross domestic product (GDP) The output of goods and services produced by labor and property located within a country.

Section 3. 2 Understanding the Economy The Economy and Marketing Economic Measurements Labor Productivity Gross Domestic Product (GDP) Gross National Product (GNP) gross national product (GNP) The total dollar value of goods and services produced by a nation, including goods and services produced abroad by U. S. citizens and companies.

Section 3. 2 Understanding the Economy The Economy and Marketing Economic Measurements Labor Productivity Gross Domestic Product (GDP) Gross National Product (GNP) Inflation inflation Rising prices.

Section 3. 2 Understanding the Economy The Economy and Marketing Economic Measurements Labor Productivity Gross Domestic Product (GDP) Gross National Product (GNP) Inflation Consumer Price Index (CPI) consumer price index (CPI) Measures the change in price over a period of time of 400 specific retail goods and services used by the average urban household.

Section 3. 2 Understanding the Economy The Economy and Marketing Economic Measurements Labor Productivity Consumer Price Index (CPI) Gross Domestic Product (GDP) Producer Price Index (PPI) Gross National Product (GNP) Inflation producer price index (PPI) Measures wholesale price levels in the economy.

Section 3. 2 Understanding the Economy The Economy and Marketing Economic Measurements Labor Productivity Consumer Price Index (CPI) Gross Domestic Product (GDP) Producer Price Index (PPI) Gross National Product (GNP) Standard of Living Inflation Unemployment Rate

Section 3. 2 Understanding the Economy The Economy and Marketing Examples of the Three Types of Goods and Services That Make Up the GDP

Section 3. 2 Understanding the Economy The Economy and Marketing Examples of the Three Types of Goods and Services That Make Up the GDP

Section 3. 2 Understanding the Economy The Economy and Marketing How Do These Two Economic Measurements Compare?

Section 3. 2 Understanding the Economy The Economy and Marketing How Do These Two Economic Measurements Compare?

Section 3. 2 Understanding the Economy The Business Cycle business cycle Recurring changes in economic activity. Expansion Recession The Business Cycle Recovery expansion A time when the economy is expanding. recession A period of economic slowdown that lasts for at least two quarters, or six months. Trough recovery The term that signifies a period of renewed economic growth following a recession or depression.

Section 3. 2 Understanding the Economy The Business Cycle During a depression, consumer spending is very low, unemployment is very high, and production of goods and services is down significantly. depression A period of prolonged recession.

Section 3. 2 Understanding the Economy The Economy and Marketing Factors Affecting the Business Cycle

Section 3. 2 Understanding the Economy The Economy and Marketing Factors Affecting the Business Cycle

Section 3. 2 Understanding the Economy Section 3. 2 1. Explain how monitoring economic measures helps economists achieve three goals of a healthy economy. Monitoring economic measures helps economists quickly notice changes in productivity, employment, and prices, and determine when the government should respond to changing conditions; for example, by lowering interest rates to spur the economy.

Section 3. 2 Understanding the Economy Section 3. 2 2. Describe the effect of high unemployment on a nation’s economy. High unemployment has a negative effect on a nation’s economy. The unemployed cannot make purchases so companies produce less and cut back on capital projects. Tax revenue decreases. Unemployment benefits cause state governments to reduce spending.

Section 3. 2 Understanding the Economy Section 3. 2 3. Describe what happens to an employee in each phase of the business cycle. During an expansion, jobs are readily available and wages typically increase; employees can move from one job to another fairly easily. In a recession, employees may be laid off and finding another job can be difficult. In a trough, jobs are typically scarce but may gradually become more plentiful. In a recovery, more jobs become available as the economy grows and workers may see their wages increase, enabling them to increase their standards of living.

End of Chapter 3 political and economic analysis Section 3. 1 What Is an Economy? Section 3. 2 Understanding the Economy