Download Economic_Roles - Solanco School District Moodle

Economic Roles and
Economic Measurements
Introduction to Business
Chapters 3 and 4
Your Three Economic Roles
•Your Consumer Role
•Your Worker Role
•Your Citizen Role
Your Consumer Role
• You exercise this role every
time you make a purchase.
• Consumers buy more than
2/3s of goods and services
produced.
• Your role as a consumer
plays a central role in our
economic system.
• Consumers help businesses
make decisions.
Your Consumer Role-The Dollar Vote
• The Dollar vote-- your
decision to buy or not buy
certain goods or services.
– When you buy something
you are “casting” your vote
for it.
– Businesses receive your
dollar votes and those of
other customers and knows
the DEMAND for its products.
Your Consumer Role-Supply and Demand
• Demand—the quantity of a
product or service that
consumers are willing and
able to buy at a particular
price.
• Supply—the quantity of a
product or service that
businesses are willing and
able to provide at a
particular price.
Your Worker Role
• You need a job to be a
consumer.
• You work to earn money
to purchase your needs
and wants.
• The more you earn the
more needs and wants
you can satisfy.
• Your worker role supports
your consumer role.
Your Worker Role—Standard of Living
• Standard of Living—refers to the
way you live as measured by the
kinds and quality of goods and
services you can afford.
– The more money you earn the
higher standard of living you can
afford.
Your Worker Role-Productivity
• Labor productivity—the quantity of a
good that an average worker can
produce in one hour.
– The US has a high productivity rate which
improves our standard of living as a nation.
– The higher your own productivity the more
you increase your standard of living.
– Improvements in technology and education
increase labor productivity.
Your Citizen Role-• Some needs and wants you cannot satisfy by
yourself.
• We fullfill our citizen role by paying taxes and
voting.
• Taxes are used to provide public goods.
• By voting we make collective decisions.
• Public goods—something needed by a
community and provided by its government.
Ex: roads, schools, police.
What is GDP?
• Gross Domestic Product —is the dollar
value of all final goods and services
produced in our country during one
year.
• GDP is one measure of how our
economy is performing
• GDP must keep growing to have a
healthy economy
What is GDP? What are the major
categories of expenditures:
• What consumers spend for food,
clothing, and housing and all other
wants.
• What businesses spend for buildings,
equipment, and supplies.
• What government agencies spend to
pay employees and to buy supplies.
GDP by Country
What is constant dollar GDP?
• Constant dollar GDP —is the value of
gross domestic product after taking out
the effect of price changes.
• GDP per capita – is calculated by
dividing by dividing GDP by the total
population.
GDP per capita by Country
Labor Productivity
• An important source of economic growth is an
increase in output per worker.
• Productivity increase —an increase in goods and
service from the same amounts of labor.
– Productivity can be increased through more education and
more technology—computers and robotics
• We can work less and produce more when we
increase labor productivity. Downside—we may have
fewer jobs for an expanding workforce.
Inflation and Deflation
• Inflation—a sustained increase in the
general level of prices.
– Can occur when the demand for goods is
greater than supply.
– Most think that inflation is harmful because
you must pay more for goods and services.
– Mild inflation can stimulate economic
growth.
What is deflation?
• A decrease in the general level of
prices.
– Occurs during recessions or depressions.
– Prices are lower but people have less
income to buy goods and services.
– Deflation was notable during the great
depression.