Download 1.02

Essential Standard 1.00
Understand the role of business in
the global economy.
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Objective 1.02
Understand economic conditions
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Topics
• Measuring economic activities
• Classifying economic conditions
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Measuring Economic Activities
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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?
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GDP per capita
GDP per capita – output per person
=_________GDP__________
Total Population
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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?
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Consumer Spending
Measurement of consumer
spending:
• Personal Income
• Retail Sales
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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
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activities?
Borrowing Activities …
• by
– Government
– Businesses
• How can government borrowing lead to a
budget deficit?
• How can using borrowed money wisely
impact businesses?
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Measuring Economic
Activities
GDP Per
capita
Consumer
Spending
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Classification of
Economic Conditions
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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.
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Year
Income
Income
percent
change
from year 1
Gallon of
milk cost
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?
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Consumer Prices
•
•
•
•
•
Inflation
Causes of inflation
Consumer Price Index (CPI)
Deflation
Causes of deflation
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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?
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