1. Essential Standard 1.00 Understand the role of business in the global economy. 1

2. Objective 1.02 Understand economic conditions 2

3. Measuring economic activities Classifying economic conditions Topics 3

4. Measuring Economic Activities 4

5. Gross Domestic Product (GDP) GDP Major categories of GDP –Individual spending –Business spending –Government spending –Exports minus imports Name some products or services you have purchased or from which you have received benefits. Which component of GDP would you classify the product or service you named? 5

6. GDP per capita GDP per capita – output per person =_________GDP__________ Total Population 6

7. Labor Activities Employment –How is employment included in measuring labor activities? –What is the national unemployment rate? What is the state unemployment rate? Productivity –What can help you be more productive in a computer lab? –What can contribute to employees increasing their production? 7

8. Consumer Spending Measurement of consumer spending: Personal Income Retail Sales 8

9. Investment Activities The money used for capital projects comes from three main sources: –Personal savings –The stock market –The bond market How does each investment activity impact economic growth? What are some examples of investment activities? 9

10. Borrowing Activities … by –Government –Businesses How can government borrowing lead to a budget deficit? How can using borrowed money wisely impact businesses? 10

11. Measuring Economic Activities GDP GDP Per capita Labor Activities Consumer Spending Investment Activities Borrowing Activities 11

12. Classification of Economic Conditions 12

13. Prosperity Employment rate and demand for products and services are high. Recession Unemployment rate is increasing and demand for products and services are lowering. Depression Unemployment rate is high and demand for products and services is lowering. Recovery Unemployment rate is lowering and demand for products and services is increasing. 13

14. Economic Conditions Change What is inflation? What causes inflation? What is deflation? How do lower prices impact deflation? 14

15. Economic Conditions Change What is Consumer Price Index (CPI)? How is CPI inflation rate calculate? Change in price index Inflation rate = –––––––––––––––––– X 100 Initial price index 15

16. Year 123 Income Income percent change from year 1 $36,000 n/a $38,000 5.6% $21,000 -42% Gallon of milk cost Gallon of milk cost percent change from year 1 $2.49 n/a $2.99 20% $3.19 28% Over a three-year period, how has the income been impacted by the cost of a gallon of milk? 16

17. What are interest rates? How do interest rates impact businesses? Economic Conditions Change 17