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Course Essential Standard Objective Essential Questions 8721 Principles of Unit A Business and Finance 1.00 B2 16% Principles of Business Understand the role of business in the global economy. 1.02 B2 5% Understand economic activities conditions. Why are economic activities measured? Which economic activities are measured? How are economic conditions classified? UNPACKED CONTENT I. II. Economic activities are measured to determine the condition of an economy. The economic activities that may be measured are: A. Gross domestic product (GDP) 1. Consumer spending 2. Business spending 3. Government spending 4. Exports minus imports B. GDP per capita C. Labor activities 1. Employment 2. Productivity D. Consumer spending 1. Personal income 2. Retail sales E. Investment activities 1. Capital projects 2. Personal savings 3. The stock market 4. The bond market F. Borrowing Activities 1. Government debt 2. Business debt Economic conditions change in phases that make up a business cycle. Economic conditions impact the buying power of consumers and affordability of interest rates. A. Phases of the business cycle are: 1. Prosperity 2. Recession 3. Depression 4. Recovery B. Buying power of consumers is affected by: 1. Inflation 2. Deflation 3. Interest rates 8721 Principles of Business and Finance Summer 2010, Version 2 Page 31 INSTRUCTIONAL ACTIVITES RELEVANCY TO OBJECTIVE RESOURCES Going Green Please refer to the Going Green document in the introductory materials for suggestions on how to conserve resources while teaching this course. For example, graphic organizers are used to guide students in taking notes. Alternative methods are suggested in the Going Green document to provide this material to students. Course PLC Please refer to the Course PLC document in the introductory materials for directions to join the Moodle Professional Learning Community (PLC) for this course. 1 Measuring Economic Activities Helps students Textbook Introduction begin to UNDERSTAND Have students read Focus on Real (B2) the concept Life on page 34 in Intro to of measuring Business, 6e, Thomson economic Southwestern textbook or use a activities current event to explain economic activities. Facilitate a discussion about measurement of situations, specifically economics. 1. How have you measured a recent circumstance such as the number of relatives who attended your birthday party? 2. How was the information from the measurement used? For example, will you invite the same relatives to another party? Have students read Focus on Real Life on page 44 in Intro to Business, 6e, Thomson Southwestern textbook or use a current event that covers capital projects and how they are funded. Facilitate a discussion using these questions: 1. How have you or someone you know planned for the purchase of an expensive item? Instructional Activities continued on the next page. 8721 Principles of Business and Finance Summer 2010, Version 2 Page 32 2 3 INSTRUCTIONAL ACTIVITES 2. Visualize your community. What are some projects that are underway, such as construction (commercial buildings or residential communities), installation of new equipment, or expansion of government services? 3. How are these projects funded? Measuring Economic Activities Reading or PowerPoint Presentation Present to students the concept of measuring economic activities. Facilitate students completing the Measuring Economic Activities Organizer. Students may obtain information by reading pages 34-37 and 44-47 in Intro to Business, 6e, Thomson South-Western textbook OR by participating during presentation of PowerPoint Presentation 1.02, slides 1-11. NOTE: Assist students with thinking of examples of economic activities. Facilitate a discussion about causes of possible economic concerns in America and in other societies around the world. Collect organizers, and then sort to check who did and who did not complete one. Look closely for examples whenever requested. Examples will help students to classify the measurements of economic activities. NOTE: This activity is a formative assessment. Measuring Economic Activities Terms Have students complete the Measuring Economic Activities section of Very Important Business Terms Activity. RELEVANCY TO OBJECTIVE Helps students UNDERSTAND (B2) the categories of economic measurement RESOURCES Measuring Economic Activities Organizer Textbook PowerPoint Presentation 1.02, slides 111 Helps students UNDERSTAND (B2) terms associated with measuring economic activities and determine why each is important Measuring Economic Activities Sections of Very Important Business Terms Activity Instructional Activities continued on the next page. 8721 Principles of Business and Finance Summer 2010, Version 2 Page 33 RELEVANCY TO OBJECTIVE Helps students COMPARE (B2) GDP, GDP per capita, and unemployment rate among several countries INSTRUCTIONAL ACTIVITES Comparing Economic Measurements Review figure 2-1 located on page 34 in the Intro to Business, 6e, Thomson Southwestern textbook. Use Applied Skills Activity on page 35 in the Intro to Business, 6e, Thomson Southwestern textbook as a guide for the next task. Facilitate students working in groups of three to complete GDP Map Activity. NOTE: Groups may obtain information from website: www.theodora.com/wfb to complete Part 1 of activity. Monitor discussions for students’ understanding of how to compare data. Optional: If students are having difficulty grasping the concept of measuring GDP, refer to the DecisionMaking Activity on page 50 in the Intro to Business, 6e, Thomson Southwestern textbook. Review the purpose of using GDP, population, GDP per capita, and unemployment rate information to measure economic activities. 5 Economic Conditions Introduction Helps students begin to Have students read Focus on Real Life UNDERSTAND (B2) the concept that on page 38 in Intro to Business, 6e, Thomson Southwestern textbook or use economic conditions change a current event about the economy. Facilitate a discussion about changing economic conditions using these questions: 1. What are some changes in the economy or business activities that have taken place within the last year? 2. How have the changes impacted consumers (government, businesses, and individuals)? Instructional Activities continued on the next page. 4 8721 Principles of Business and Finance Summer 2010, Version 2 RESOURCES Textbook GDP Map Activity Website: www.theodora. com/wfb Textbook Page 34 RELEVANCY TO OBJECTIVE Helps students CLASSIFY (B2) economic conditions INSTRUCTIONAL ACTIVITES Economic Conditions Reading or PowerPoint Presentation Present to students the concept that economic conditions change according to the four phases of the business cycle. Facilitate students completing Economic Conditions Organizer. Students may obtain information by reading pages 3842 in Intro to Business, 6e, Thomson Southwestern textbook OR by participating during presentation of PowerPoint Presentation 1.02, slides 12-17. For Part B of the organizer, use activity #7 on page 49 in the Intro to Business, 6e, Thomson Southwestern textbook as a guide. Discuss the possible actions of businesses during each phase of the business cycle. 1. Prosperity: Businesses continue making profits. Example: Macy’s department store may continue with business as usual. 2. Recession: Businesses strategize to stimulate demand for products and services. Example: United States Post Office may expand shipping services by picking up packages from customers’ door steps and make pricing easier for customers to determine. 3. Depression: Businesses try to maintain profits or break even to avoid going out of business. Example: Walmart may change all customer service representatives from full-time to parttime employees without benefits. 4. Recovery: Businesses will increase human capital. Example: IBM may travel to several college campuses to recruit new employees. Review the four phases of the business cycle, the main causes of inflation, and how interest rates affect businesses. Instructional Activities continued on the next page. 6 8721 Principles of Business and Finance Summer 2010, Version 2 RESOURCES Economic Conditions Organizer Textbook PowerPoint Presentation 1.02, slides 1217 Page 35 7 8 INSTRUCTIONAL ACTIVITES Collect organizers, and then sort to check who did and who did not complete one. Especially look for examples whenever requested. Examples will help students to classify economic conditions. Based on results of the previous task, facilitate a discussion about examples for classifying economic conditions. NOTE: This activity is a formative assessment. Measuring the Economy Activity Review with students the formula for calculating consumer price index (CPI). Have students complete the Measuring the Economy Activity. After students complete the activity, have a few to explain which economic conditions represent each phase of the business cycle. Also, have a few students to show or explain how they calculated the CPI inflation rate. Facilitate a discussion for students to explain why they think inflation happens and if it is a negative or positive measurement of an economy. Economic Conditions Terms Have students complete Economic Conditions section of Very Important Business Terms. 9 RELEVANCY TO OBJECTIVE Textbook PowerPoint Presentation 1.02, slides 12-17 Helps students UNDERSTAND (B2) how to calculate CPI and use it as a measurement of economic activity Measuring the Economy Activity Measuring the Economy Activity Key Economic Conditions Organizer Helps students UNDERSTAND (B2) terms associated with classifying economic conditions Helps students EXPLAIN (B2) how business activities may impact economic conditions Impact of Economic Conditions Note for the next task, students will need access to print or online resources to research one of the listed emerging business issues. Assign students to teams of two or three members Instructional Activities continued on the next page. 8721 Principles of Business and Finance RESOURCES Summer 2010, Version 2 Economic Conditions section of Very Important Business Terms Print or online resources for researching specific emerging business issues Page 36 RELEVANCY TO OBJECTIVE INSTRUCTIONAL ACTIVITES Facilitate teams researching and presenting if they agree or disagree with one of the emerging issues: 1. Purchasing of correctional institutions by businesses 2. Providing $8,000 tax credit for first-time home buyers 3. Increasing employment opportunities in manufacturing Facilitate teams classify which phase of the business cycle the issue would most likely occur and state why. Facilitate teams presenting issues and results of activity including most likely phase of the business cycle, and positions on issues. Use rubric at http://www.fblapbl.org/docs/FBLARatingSheets2009 FINAL.pdf for scoring presentations. NOTE: Adapt the rubric as necessary. Use Emerging Business Issues Event on page 51 in the Intro to Business, 6e, Thomson South-Western textbook as a guide. 10 Economic Conditions Minute Paper Helps students NOTE: For the next task students will SUMMARIZE (B2) what they need access to Intro to Business, learned and 6e, Thomson South-Western which area they textbook, organizers, and activities need more clarity completed for this objective. Facilitate students completing a minute paper to elicit information about comprehension of economic conditions by allowing students to respond to statements: 1. Describe the most important point you learned in this objective. 2. Describe which point remains least clear to you. Instructional Activities continued on the next page. 8721 Principles of Business and Finance Summer 2010, Version 2 RESOURCES Website: http://www.fblapbl.org/docs/FBLARatin gSheets2009FINAL.pdf Textbook Textbook Organizers and activities Page 37 11 L- INSTRUCTIONAL ACTIVITES Supplemental Economic activities and conditions Ask students if their career plans include improving the quality of life for others? Discuss the relationship between students’ responses to previous question and economic development. Refer to partial list of related careers on page 33 in Intro to Business, 6e, Thomson South-Western textbook or in Occupational Outlook Handbook at website www.bls.gov/oco . Have students read Planning a Career in… on page 33 in Intro to Business, 6e, Thomson SouthWestern textbook. Discuss how economic activities and conditions could impact economic development. For example: A local millionaire loaned several prospective small business owners money as start-up funds. This service could be an indicator for borrowing activities and the prosperity phase of the business cycle. Invite guest speakers representing the economic development field. RELEVANCY TO RESOURCES OBJECTIVE Helps students Textbook UNDERSTAND (B2) personal Website: relevance to www.bls.gov/oco economic activities and conditions –Literacy Strategy: The very important business terms activity is a writing assessment that allows students to write statements about why each term is important to the content for which it is being used. Students are able to reflect on the terms in order to process their own thoughts and learning of how the terms are important to the content area. –Numeracy Strategy: To make a Math-to-Life Connection is to see a relationship between a math concept and a real-life situation. Finding math-to-life connections greatly increase the relevance of new information and skills being learned. –Literacy Strategy: The minute paper is a classroom assessment of both teaching approach and techniques. The approach is the more you know about what and how students are learning; the better planning of learning activities to structure teaching. The techniques are mostly simple, non-graded, anonymous, in-class activities that give useful feedback on the teaching-learning process. 8721 Principles of Business and Finance Summer 2010, Version 2 Page 38 Instructional Support Material Textbook Intro to Business, 6e, Thomson SouthWestern Websites www.theodora.com/wfb http://www.fblapbl.org/docs/FBLARatingSh eets2009FINAL.pdf Handouts (included) Measuring Economic Activities Organizer Very Important Business Terms GDP Map Activity Economic Conditions Organizer Measuring the Economy Activity Measuring the Economy Activity Key 8721 Principles of Business and Finance www.bls.gov/oco (Supplemental) Other PowerPoint Presentation 1.02 (separate file) Print or online resources for researching specific emerging business issues Assessment Prototypes (included) Summer 2010, Version 2 Page 39 Name ____________________ Class __________ Date __________ Measuring Economic Activities Organizer Directions: Provide the requested information. Ways to Measure Economic Activities Describe Gross Domestic Product (GDP) Write the major categories and other examples of economic activities included in the GDP Category Category Category Category Example House valued at $150,000 2. GDP per capita determines ____________ ____________ ____________ Example $5,000 monthly lease for a beauty salon = 8721 Principles of Business and Finance Example Concert sponsored by the city Example ÷ Summer 2010, Version 2 Page 40 Measuring Economic Activities Organizer Continued 3. Labor Activities Employment Which people are included in the unemployment rate? Productivity How can productivity be increased? Examples Sheetz convenience store provides touch-screen computers for customers to place food orders instead of sales associates taking food orders. _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ 8721 Principles of Business and Finance Summer 2010, Version 2 Page 41 Measuring Economic Activities Organizer Continued Consumer Spending List and describe the economic indicators for consumer spending Includes: Includes: Investment Activities Describe how the listed investment activities promote economic growth. Personal Savings The Stock Market The Bond Market Examples Mary has saved over $800 in a local bank. Examples Jason purchased stock of a pharmaceutical company. Examples A bond passed that will fund several city parks. Jack borrowed $600 from a local bank to buy a new oven. 8721 Principles of Business and Finance Summer 2010, Version 2 Page 42 Measuring Economic Activities Organizer Continued Borrowing Activities Government Businesses Describe how government borrowing can lead to a budget deficit. 8721 Principles of Business and Finance Describe how using borrowed money wisely can impact businesses. Summer 2010, Version 2 Page 43 Name_________________________ Class ________________ Date _________ Very Important Business Terms Activity Directions: In the right-hand column of the table, describe why the terms listed in the left-hand column are important. Measuring Economic Activities Very Important Why is the term important to business? Business Term Gross domestic Example: GDP indicates the health and growth of an economy. product (GDP) If the GDP for a country is steadily increasing, this is usually an indication of higher demands for goods and services. A higher demand for goods and services result in more goods and services being produced. GDP per capita Productivity Personal income Retail sales Capital projects 8721 Principles of Business and Finance Summer 2010, Version 2 Page 44 Very Important Business Terms Continued Stock Bond Economic Conditions Business cycle Prosperity Recession Depression Recovery Inflation Deflation 8721 Principles of Business and Finance Summer 2010, Version 2 Page 45 Name ____________________ Class __________ Date __________ GDP Map Activity Directions: Select three countries of your choice from the website www.theodora.com/wfb and obtain requested information about each one. "english.freemap.jp." Free blank outline world maps. 11 Jan 2006. Sankakukei, InoueKeisuke. 14 Nov 2008 <http://english.freemap.jp/world_e/img/4/2.gif>. Part 1 Country 1 Country 2 Country 3 GDP last year Population last year GDP per capita last year GDP two years ago Population two years ago GDP per capita two years ago Part 2 Using each country’s GDP for one and two years ago, write a statement about each one’s economic performance. Country 1 ___________________________________________________________ Country 2 ___________________________________________________________ Country 3 ___________________________________________________________ Part 3 Locate each country on the map above and mark the location of the countries. 8721 Principles of Business and Finance Summer 2010, Version 2 Page 46 Name ____________________ Class __________ Date __________ Economic Conditions Organizer Directions: Provide the name and a brief description in your words of each phase of the business cycle. Part A The Four Phases of the Business Cycle 8721 Principles of Business and Finance Summer 2010, Version 2 Page 47 Economic Conditions Organizer Continued Part B Situation Employment trend Prosperity Recession Depression Supply and demand of goods and services trend Possible actions of businesses 8721 Principles of Business and Finance Summer 2010, Version 2 Page 48 Recovery Economic Conditions Organizer Continued Part C Inflation Define: Consumer Prices Deflation Define: How may high demand and limited supply of products cause inflation? How do lower prices impact deflation? How does inflation impact consumer buying power? What is consumer price index (CPI)? ________________________________________ ______________________________________________________________________ ______________________________________________________________________ How is the consumer price index (CPI) calculated? ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ What are interest rates? _________________________________________________ ______________________________________________________________________ ______________________________________________________________________ How do interest rates impact businesses? ____________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ 8721 Principles of Business and Finance Summer 2010, Version 2 Page 49 Name ____________________ Class __________ Date __________ Measuring the Economy Activity Part A Directions: Label the business cycle curve. Then, use the list of economic conditions below to describe each phase of the business cycle by putting the correct conditions in the appropriate box. Economic Conditions Highest period of economic growth Low unemployment Economic slowdown Prolonged recession Highest point of the business cycle Renewed economic growth Increase in output of goods and services High consumer spending Production slows down High unemployment Extremely low consumer spending Moderate business expansion High output of goods and services Drastic decrease in production Decrease in consumer spending Increased consumer spending Reduced unemployment Rise in unemployment Prosperity Depression Recovery Recession 8721 Principles of Business and Finance Summer 2010, Version 2 Page 50 Part B Directions: Complete the activity using your Economic Conditions Organizer and the following formula: Change in price index Inflation rate = –––––––––––––––––– X 100 Initial price index Find the CPI inflation rate for the following examples. Round to the nearest tenth. 1. In 2006, the average price of a new house in the United States was $301,000. In 2007, the average price of a new home in the United States was $314,600. What is the CPI inflation rate from 2006 to 2007? Show your calculations. 2. The average price of a movie ticket in 1946 was $0.55. In 2006, the average price of a movie ticket was $6.04. What was the CPI inflation rate of movie tickets from 1946 to 2006? Show your calculations. 3. A gallon of milk was on average $1.00 in 1957. In 2007, the average gallon of milk costs $3.00. What is the CPI inflation rate of a gallon of milk between 1957 and 2007? Show your calculations. 8721 Principles of Business and Finance Summer 2010, Version 2 Page 51 Name ____________________ Class __________ Date __________ Measuring the Economy Activity KEY Part A Directions: Label the business cycle curve. Then, use the list of economic conditions below to describe each phase of the business cycle by putting the correct conditions in the appropriate box. Prosperity Recession Recovery Depression Economic Conditions Highest period of economic growth High unemployment Low unemployment Extremely low consumer spending Economic slowdown Moderate business expansion Prolonged recession High output of goods and services Highest point of the business cycle Drastic decrease in production Renewed economic growth Decrease in consumer spending Increase in output of goods and services Increased consumer spending High consumer spending Reduced unemployment Production slows down Rise in unemployment Prosperity Low unemployment Highest point of the business cycle High consumer spending High output of goods and services Depression Prolonged recession High unemployment Extremely low consumer spending Drastic decrease in production Recovery Highest period of economic growth Increase in output of goods and services Moderate business expansion Increased consumer spending Reduced unemployment Renewed economic growth Recession Economic slowdown Production slows down Decrease in consumer spending Rise in unemployment 8721 Principles of Business and Finance Summer 2010, Version 2 Page 52 Part B Directions: Complete the activity using your Economic Conditions Organizer and the following formula: Change in price index Inflation rate = –––––––––––––––––– X 100 Initial price index Find the CPI inflation rate for the following examples. Round to the nearest tenth. 1. In 2006, the average price of a new house in the United States was $301,000. In 2007, the average price of a new home in the United States was $314,600. What is the CPI inflation rate from 2006 to 2007? Show your calculations. Inflation rate = $13,600 x 100 $301,000 Inflation rate = 4.52% 2. The average price of a movie ticket in 1946 was $0.55. In 2006, the average price of a movie ticket was $6.04. What was the CPI inflation rate of movie tickets from 1946 to 2006? Show your calculations. Inflation rate = $5.49 x 100 $0.55 Inflation rate = 998.18% 3. A gallon of milk was on average $1.00 in 1957. In 2007, the average gallon of milk costs $3.00. What is the CPI inflation rate of a gallon of milk between 1957 and 2007? Show your calculations. Inflation rate = $2.00 x 100 $1.00 Inflation rate = 200.00% 8721 Principles of Business and Finance Summer 2010, Version 2 Page 53 ASSESSMENT PROTOTYPES Note: These assessment prototypes are examples of the types of items included in the item bank. All items are comparable to the cognitive process of the understand verb. Questions require students to demonstrate that they understand the content. Assessment prototypes will not be used on the secured test, but questions in similar formats will be used. The state department collects monthly reports of total sales from all newspaper companies in North Carolina. This information would be useful for which measurement of economic activities? A. Borrowing B. Consumer spending C. Investment activities D. Labor activities ANSWER: B A report about the economy reveals a decreasing unemployment rate, consumer buying of goods and services is increasing significantly, and the GDP is rising. Which business cycle does this report cover? A. Depression B. Prosperity C. Recession D. Recovery ANSWER: D 8721 Principles of Business and Finance Summer 2010, Version 2 Page 54