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Introduction to Business, Economic Activity in a Changing World Slide 2 of 55
Gross Domestic Product (GDP)
One way of telling how well an
economy is performing is to determine
how many goods and services it
produces during a certain period of
time.
3. Chapter 3
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Gross Domestic Product (GDP)
The standard of living is the amount
of goods and services the average
citizen can buy.
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Rate of Inflation
Inflation is a general increase in the
cost of goods and services.
Inflation can happen when an
economy actually becomes too
productive.
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Rate of Inflation
Deflation is a general decrease in the
cost of goods and services.
When an economy produces more
goods than people want, it has to
lower prices and cut production.
6. Chapter 3
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National Debt
When the government spends more
on programs than it collects in taxes,
the difference in the amount is called
the budget deficit.
7. Chapter 3
Introduction to Business, Economic Activity in a Changing World Slide 7 of 55
National Debt
The total amount of money a
government owes is its national debt.
If the debt gets too large, a nation can
become dependent on other nations or
unable to borrow any more money.
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National Debt
If a nation spends less than its income,
it has a budget surplus.
The government will probably use a
surplus to cut taxes, reduce the
national debt, or increase spending for
certain programs.
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The Business Cycle
Over long periods of time economic
changes seem to form patterns.
The rise and fall of economic activity
over time is called the business
cycle.
10. Chapter 3
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Figure
3.2 BUSINESS CYCLE MODEL
The repeated rise
and fall of
economic activity
over time is called
a business cycle.
What are the four
phases of the
cycle?
11. Chapter 3
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Measuring Economic Activity
Economic indicators are figures used
to measure economic performance.
12. Chapter 3
Introduction to Business, Economic Activity in a Changing World Slide 12 of 55
Measuring Economic Activity
Economic indicators measure things
like how much a country is producing,
whether its economy is growing, and
how it compares to other countries.
13. Chapter 3
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Unemployment Rate
The unemployment rate measures the
number of people who are able to
work but don’t have a job during a
given period of time.
