Essential Standard 1 00 Understand the role of

Essential Standard 1. 00 Understand the role of business in the global economy. 1

Objective 1. 02 Understand economic conditions 2

Topics • Measuring economic activities • Classifying economic conditions 3

Measuring Economic Activities 4

Gross Domestic Product (GDP) • GDP • Major categories of GDP – – Individual spending Business spending Government spending Exports minus 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 – output person =_____GDP_____ Total Population 6

Labor Activities • Employment – How is employment included in measuring labor activities? – What is the national unemployment rate? What is the state unemployment rate? • Productivity – What can help you be more productive in a computer lab? – What can contribute to employees increasing their production? 7

Consumer Spending Measurement of consumer spending: • Personal Income • Retail Sales 8

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? 9

Borrowing Activities … • by – Government – Businesses • How can government borrowing lead to a budget deficit? • How can using borrowed money wisely impact businesses? 10

Measuring Economic Activities La bo P D G GDP Per capita r. A cti Consumer Spending s e i t i ctiv In ves A t n tme Borrowin vit ies g Activiti es 11

Classification of Economic Conditions 12

Prosperity Employment rate and demand for products and services are high. Recession Unemployment rate is increasing and demand for products and services are lowering. Recovery Depression Unemployment rate is high and demand for products and services is lowering. Unemployment rate is lowering and demand for products and services is increasing. 13

Economic Conditions Change • What is inflation? • What is deflation? • What causes inflation? • How do lower prices impact deflation? 14

Economic Conditions Change • What is Consumer Price Index (CPI)? • How is CPI inflation rate calculate? Change in price index Inflation rate = ––––––––– X 100 Initial price index 15

Year Income percent change from year 1 Gallon of milk cost percent change from year 1 1 2 3 $36, 000 $38, 000 $21, 000 n/a 5. 6% -42% $2. 49 $2. 99 $3. 19 n/a 20% 28% Over a three -year period, how has the income been impacted by the cost of a gallon of milk? 16

Economic Conditions Change • What are interest rates? • How do interest rates impact businesses? 17