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General Business. Unit 1 – Economic Roles Chapter 4 Economic Measurements. Book Time. Page 41 Read aloud. Classwork. Hand-Out CW-4-1 Individual work Check if done Review. Economic Growth. Steady increase in production in an economic system High rate of employment
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General Business Unit 1 – Economic Roles Chapter 4 Economic Measurements
Book Time • Page 41 • Read aloud
Classwork • Hand-Out CW-4-1 • Individual work • Check if done • Review
Economic Growth • Steady increase in production in an economic system • High rate of employment • Low rate of business failure
GDP • Gross Domestic Product • Total $ value of all final goods/services produced during 1 year • Measure of how economy is performing
GDP • 3 major categories of expenditures • 1. What consumers spend for food, clothing & housing • 2. What businesses spend for buildings, equipment & supplies
GDP • 3 major categories (cntd.) • What government agencies spend to pay employees and to buy supplies
GDP • Doesn’t include: • Value of work we do for selves • Mowing lawn • Cleaning house
? GDP ? • Why is the value of the work we do for ourselves not included as part of the GDP?
GDP • Includes only final goods • Intermediate goods not counted • Manufacturing goods • Raw materials – steel, iron ore
GDP • End of 1990’s: • GDP = >$8.5 trillion • Comparison year to year • Prices must be adjusted to be “equal value”
Classwork • Hand-Out CW-4-2 • Individual Work • Check if done • Review
Base Year • Year chosen to compare an item / price, to another year
Constant Dollar GDP • Value of GDP after removing effect of price changes • Also called “Real GDP or GDP in Real Terms”
Determine Real GDP for the Following years 6883.3 7066.3 7348.2 7543.8 7813.2. 8163.3 8517.6 8873.3
GDP Per Capita • Output per person • Divide GDP by total population • Increase = growing economy • Decrease = economic trouble
Productivity Increase • Increase in goods/services from same # of workers • Improved quality of capital resources (equip.) • Worker training • Management techniques
Classwork • CW-4-3 • Individual work • Check if done • Review
Business Cycle • Recurring ups & downs of GDP • Movement of economy from 1 condition to another & back again • Cyclical pattern
Business Cycle • 4 phases • Prosperity • Recession • Depression • Recovery
Prosperity • High point of cycle • Want to work = job • Businesses produce record amounts • Wages good • GDP grows • Boom period
Recession • Economy slows • Demand decreases • Businesses lower production • Unemployment rises • GDP slows for 2+ qtrs. • Drop in related businesses • Ripple effect
Depression • Recession deepens & spreads thru out country • Prolonged period of high unemployment • Weak sales • Business failures • GDP falls rapidly
Depression • Great Depression • 1930-1940 • 25% of labor force unemployed • Couldn’t afford basic needs
Recovery • Nation moves into prosperity • Unemployment decreases • Increased demand for goods/services • Businesses produce more
Inflation • Sustained increase in prices • Greater demand than supply • Prices rise faster than wages • Pay higher prices
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
Deflation • Decrease in prices • Usually during recession or depression • Prices lower, but people have less money to buy
Book Time • Read pg. 47 • Global Perspectives • Hyperinflation • Answer 2 ?’s • Check if done • Review
Read • Chapter 4 – entire • Communicating for Success – pg. 51 • Answer 2 ?’s
Study Guide • Pgs. 15-18 • Groups 2-3 • Turn in 1 S.G. for group • Review in class
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
The End Unit 1 Chapter 4