General Business

1. General Business Unit 1 – Economic Roles Chapter 4 Economic Measurements

2. Book Time • Page 41 • Read aloud

3. Classwork • Hand-Out CW-4-1 • Individual work • Check if done • Review

4. Economic Growth • Steady increase in production in an economic system • High rate of employment • Low rate of business failure

5. GDP • Gross Domestic Product • Total $ value of all final goods/services produced during 1 year • Measure of how economy is performing

6. GDP • 3 major categories of expenditures • 1. What consumers spend for food, clothing & housing • 2. What businesses spend for buildings, equipment & supplies

7. GDP • 3 major categories (cntd.) • What government agencies spend to pay employees and to buy supplies

8. GDP • Doesn’t include: • Value of work we do for selves • Mowing lawn • Cleaning house

9. ? GDP ? • Why is the value of the work we do for ourselves not included as part of the GDP?

10. GDP • Includes only final goods • Intermediate goods not counted • Manufacturing goods • Raw materials – steel, iron ore

11. GDP • End of 1990’s: • GDP = >$8.5 trillion • Comparison year to year • Prices must be adjusted to be “equal value”

12. Classwork • Hand-Out CW-4-2 • Individual Work • Check if done • Review

13. Base Year • Year chosen to compare an item / price, to another year

14. Constant Dollar GDP • Value of GDP after removing effect of price changes • Also called “Real GDP or GDP in Real Terms”

15. Determine Real GDP for the Following years 6883.3 7066.3 7348.2 7543.8 7813.2. 8163.3 8517.6 8873.3

16. GDP Per Capita • Output per person • Divide GDP by total population • Increase = growing economy • Decrease = economic trouble

17. Productivity Increase • Increase in goods/services from same # of workers • Improved quality of capital resources (equip.) • Worker training • Management techniques

18. Classwork • CW-4-3 • Individual work • Check if done • Review

19. Business Cycle • Recurring ups & downs of GDP • Movement of economy from 1 condition to another & back again • Cyclical pattern

20. Business Cycle • 4 phases • Prosperity • Recession • Depression • Recovery

21. Prosperity • High point of cycle • Want to work = job • Businesses produce record amounts • Wages good • GDP grows • Boom period

22. Recession • Economy slows • Demand decreases • Businesses lower production • Unemployment rises • GDP slows for 2+ qtrs. • Drop in related businesses • Ripple effect

23. Depression • Recession deepens & spreads thru out country • Prolonged period of high unemployment • Weak sales • Business failures • GDP falls rapidly

24. Depression • Great Depression • 1930-1940 • 25% of labor force unemployed • Couldn’t afford basic needs

25. Recovery • Nation moves into prosperity • Unemployment decreases • Increased demand for goods/services • Businesses produce more

26. Inflation • Sustained increase in prices • Greater demand than supply • Prices rise faster than wages • Pay higher prices

27. Inflation • Sustained increase (cntd.) • Mild inflation (2-3%) stimulated economic growth • Companies sell goods higher prices, profits increase, hire more workers who then spend money in economy

28. Deflation • Decrease in prices • Usually during recession or depression • Prices lower, but people have less money to buy

29. Book Time • Read pg. 47 • Global Perspectives • Hyperinflation • Answer 2 ?’s • Check if done • Review

30. Read • Chapter 4 – entire • Communicating for Success – pg. 51 • Answer 2 ?’s

31. Study Guide • Pgs. 15-18 • Groups 2-3 • Turn in 1 S.G. for group • Review in class

32. Computer Time • Web-Site: • http://stats.bls.gov/ • At a Glance Tables: right • U.S. Economy at a Glance: look at unemployment rates • Go to: other avail. @ a glance • Go to PA: look at data

33. The End Unit 1 Chapter 4