Intro to Business - Chapter 2Presentation Transcript
Rate of employment
high rate of employment is good sign
Rate of business failure
low rate of failure is good sign
Rate of production or output of our nation
Increasing growth is a good sign
GDP = total dollar value of all final goods and services produced in our country during one year.
Final goods – goods sold directly to consumers. Example: car
GDP tells us how the economy is performing
What consumers spend for food, clothing, housing, and other spending;
What businesses spend for buildings, equipment, and supplies; and
What government agencies spend to pay employees and to buy supplies.
The exports of a country less the imports into the country.
Base year - the year chosen to compare an item, such as price, to any other year.
Constant dollar GDP = value of gross domestic product after taking out the effect of price changes.
(Also called real GDP or GDP in real terms)
GDP per capita = GDP ÷ total population
÷ GDP Population
Labor force consists of all people above age 16 who are actively working or seeking work.
Unemployment Rate – portion of people in the labor force who are not working but are looking for work and willing to work.
Productivity – production output in relation to a unit of input.
How do we increase productivity?
Capital resource improvement
Improved worker training
Improved management techniques
Personal income refers to salaries and wages, including investments.
Retail Sales – sales of durable and nondurable goods bought by consumers.
Indicates level of consumer spending.
Main items measured = automobiles, building materials, furniture, gasoline & clothing
RECOVERY PROSPERITY RECESSION DEPRESSION
Most people who want to work are working
Businesses produce goods and services in record numbers
Wages are good
Rate of GDP growth increases
Demand for goods and services are high
This boom period is the peak of the cycle
Economy begins to slow down.
Demand begins to decrease
businesses lower production of goods and services
unemployment begins to rise
GDP growth slows for two or more quarters
Phase marked by a prolonged period of high unemployment
weak sales of goods and services
businesses begin to fail
GDP falls rapidly during depression.
Unemployment begins to decrease
Demand for goods and services increases
GDP begins to rise again.
People gain employment
Consumers regain confidence
Inflation - sustained increase in the general level of prices.
Deflation - decrease in the general level of prices. Occurs usually in periods of recession and depression. Prices are lower, but people have less money to buy them.
“ To maintain or increase our existing standard of living and to prevent unemployment from rising, we must increase our economic growth continuously. Economic growth is important because it provides jobs and enables people to better meet their needs and wants.”
Introduction to Business Textbook
Major source of investment funds
Savings rate of a country important for economic growth
The Stock Market
Stock = ownership in a corporation
The Bond Market
Bond = debt for an organization
Creditor = somebody who loans money
If you purchase a bond, you loan the corporation money which will be repaid with interest.
Government uses borrowed funds for major projects
Budget Surplus = government spends less than it takes in. (Money left over)
Budget Deficit = government spends more than it takes in. (Debt)
National Debt =amount owed by federal government
Loans, bonds, and mortgages are methods used by businesses