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EXPLORING BUSINESS
Unit 1: Intro. to Business
Part 3: Economic Measurements
Student Will:
Define Gross Domestic Product and how it applies to our
economic well-being
Understand and define the 4 phases of the business cycle
Define Inflation and Deflation
I. Economic Measurements

Economic Growth refers to a steady
increase in production of goods and
services.

United States of America
– 7% of World’s Land
– 5% of World’s Population
– 25% of all goods and services produced in
world.
A. Gross Domestic Product
(GDP)

The total dollar value of all final goods
and services produced in our country
during one year.
– Intermediate goods are not counted, because
they would be counted twice.

A way of measuring our economy and
economic well-being.
– How well our needs and wants are being
satisfied.
Classroom GDP (shoes)
GDP per Capita = Total / Students
Gross Domestic Product (GDP)

A growing GDP means more jobs and
greater consumer satisfaction.

A declining GDP means….
Measuring GDP

GDP includes 3 major categories:
– What consumers spend for food, clothing and
housing.
– What businesses spend for buildings,
equipment and supplies.
– What government agencies spend to pay
employees and to buy supplies.
GDP
Current GDP
 GDP By country

II. The Business Cycle

The movement of the economy from one
condition to another and back again.
– Four Phases
PROSPERITY
RECESSION
RECOVERY
DEPRESSION
The Business Cycle

Phase 1: Prosperity
– A period when most people who want to work
are working and businesses produce goods and
services in record numbers.
– “Boom” period of cycle.
– Peak of cycle
Characteristics:
•Good Wages
•GDP Increases
•Demand High for Goods and Services
The Business Cycle

Phase 2: Recession
– A period where demand begins to decrease,
businesses lower production of goods and
services, unemployment begins to rise and
GDP growth slows for two or more quarters
of calendar year.
The Business Cycle

Phase 3: Depression
– A period marked by a prolonged period of
high unemployment, weak sales of goods and
services, and business failures.
• GDP falls rapidly during depression.
– U.S.A’s last depression was from 1929-1940.
• “Great Depression”
– 25% of population was unemployed.
– Everything was depressed.
The Business Cycle

Phase 4: Recovery
– A period in which unemployment begins to
decrease, demand for goods and services
increases and GDP begins to rise again.
• Time of this period can be slow or fast.
III. Inflation and Deflation
A. Inflation

A sustained increase in the general level of
prices.
– Price of goods and services increase, but wages
for workers do not increase at same pace.
B. Deflation

A decrease in the general level of prices.
– Usually occurs during periods of recession and
depression.
– Prices of products are lower, but people have
less money to buy products.
REVIEW- Quest Tuesday
Complete Review Sheet pg 32
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business unit 1”

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