Download Chapter 2 1Notes - Period2BusinessBasicsFall2014

2.1
The Main Idea
Throughout the years, the U.S. economic system
has changed. Each change affected what was
produced and how people were employed. To
gauge the health of our economic system, we use
a variety of economic indicators.
2.1
Key Concepts
The Changing U.S. Economy
Measuring Economic Activity
2.1
Who has fat stacks?
Who thinks they have the most money on
them right now?
Who is the tallest in here?
Who has the highest GPA?
2.1
Measuring Economic Activity
Economic indicators measure things such as:
how much a country is producing
whether the economy is growing
how the economy compares to other
countries
2.1
Gross Domestic Product
Measuring gross
domestic product (GDP),
involves computing the
sum of goods and services
sold to businesses,
consumers, the
government, and other
countries.
gross domestic product
(GDP)
The total dollar value of all
final goods and services
produced in a country
during one year.
2.1
Components of GDP – what goes into it?
1. Consumer spending for food, clothing,
housing and other spending.
2. Business spending for buildings,
equipment, and inventory items
3. Government spending to pay employees
and to buy supplies and other goods and
services
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Components of GDP (cont’d)
4. The exports of a country less (MINUS) the
imports into the country
Ex: Exports – Imports = the money you can
count towards your GDP
USDebtClock
2.1
Categories of GDP spending
Consumer Spending
Business
Gov't
Exports
2.1
What counts towards GDP?
Ex – You are out mowing your lawn
GDP doesn’t include value of work you do for
yourself. BUT included in GDP is
everything you bought to cut your lawn.
2.1
What doesn’t count towards GDP?
Only final goods are counted when you
measure GDP
Ex: Only a finished car is measured in
GDP, everything that went into that car
wasn’t counted – ex - the steel and fabric
Intermediate goods would be counted twice
(Steel and fabric)
2.1
GDP per capita
Another way to measure
economic growth is GDP
per capita.
Calculated by:
GDP ÷ total population.
GDP per capita
Output per person
2.1
GDP per capita
Reminder:
Calculated byGDP ÷ total population.
USDebtClock
2.1
Employment
*155+/- million people work in the US
Labor force consists of all people over age
16 who are actively working or are seeking
work
Unemployment rate is the portion of people
in the labor force who aren’t working.
2.1
Labor force – I don’t get it
Students, retired
people, people who
can’t work or don’t
want to
Not part
Labor Force
Unemployed
of the
Labor
force
2.1
Employment
People are
“unemployed” if:
1.They are looking for
work
2.Willing/able to work
3.But can’t find a job
Unemployment rate
The portion of people in
the labor force who are not
working
2.1
Employment
The unemployment rate measures the
number of people who are able and willing to
work but cannot find work during a given
period.
Unfortunately, not everyone is able/willing
to work
Students, retired people, and others who
cannot or do not wish to work are NOT part of
the labor force!!!
2.1
Types of Unemployment (Contd)
Structural – new technology replaces
workers, requiring new skills or companies
merge and eliminate jobs
Cyclical – the entire economy slows down
Try finding our current unemployment rate
2.1
Productivity
1890’s average worker put in about 60 hours
of work in a week
Now we work around 40 hours a week but
we produce WAY more goods and
services….how is this?
– Technology
– Management techniques
– Better worker training
2.1
Productivity
A vital source of
economic growth is
an increase in output
per worker.
productivity
The production output in
relation to a unit of input
(how many cans of
chicken noodle soup can
be produced with the
number of staff working at
the time)
2.1
Other factors of Economic Growth
Personal Income
Personal income
Personal income
funds provide the
Salaries and wages as
foundation for buying
well as investment income
and gov’t payments to
needed goods and
individuals.
services.
2.1
Retail Sales
On a monthly basis,
the U.S. Dept of
Commerce measures
retail sales by
consumers.
Increasing retail sales
usually points towards
economic growth
Retail sales
Sales of durable and
nondurable goods bought
by consumers
2.1
Retail Sales
Main items measure for estimating retail
sales include: automobiles, building
materials, furniture, gasoline, clothing as
well as purchases from restaurants, dept.
stores, and food and drug stores
2.1
Retail Sales
Durable and nondurable? What does that mean?
Durable –
– a consumer good that typically lasts longer than
three years
– Furniture, jewelry, cars, appliances
Nondurable –
– a consumer good that typically lasts less than
three years
– Food, cosmetics, medicines, clothes, shoes, small
electronics
2.1
Partner Activity
On paper or electronically, list all the
consumer goods and services you used
from yesterday morning until you went to
bed (list durable goods together and
nondurable goods together)
Count them up when finished
2.1
Group Activity
Get a partner
In presentation software, create a presentation
about the countries given to you and include:
– Country
– Flag
– Map of where country is
located
– Population
– GDP
– GDP per capita
– Unemployment Rate
– Personal Income Level
– % change in each
category from 2010 to
2014 (see next slide for
example)
– Works cited
page……don’t forget
2.1
Calculating % Change
(New # – Old #)
x 100
Old #
2010 – 31,306
2013 – 47,929
Percent Change = 53%
2.1
You are a purchasing agent for a large furniture
manufacturer. You have received several bids from
lumber companies for a supply of teak, a very
dense and decay-resistant type of wood. The
lowest bid comes from a lumber company that has
been known to abuse the environment.
Decision Making How does the lumber company’s
reputation affect your decision? Explain your
answer.
2.1
Answer
Students might suggest that all aspects of the
company’s reputation should be considered before
making a decision to buy from the company.
2.1
1. What do economic indicators measure?
Economic indicators measure the economic
health of the nation.
2.1
2. How do we find GDP per capita?
GDP ÷ by total population of a country
2.1
3. What are the main sources of personal
income?
Wages, salaries, investment income, and gov’t
payments.