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 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 – output 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 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 9 activities?

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

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? 14

Consumer Prices • • • Inflation Causes of inflation Consumer Price Index (CPI) Deflation Causes of deflation 15

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? 16