2-3 Other Measures of Business Activity

Goals Discuss investment activities that promote economic growth. Explain borrowing activities by government, business, and consumers. Describe future concerns of economic growth.

Investment Activities Capital Spending – refers to the money spent by a business for an item that will be used over a long period. Capital Projects – involved spending by businesses for items such as land, buildings, equipment, and new products The money for capital projects comes from 3 sources: Personal savings, stock investments and bonds

Personal Savings –A major source of investment funds –It’s the money you deposit in a bank –You receive interest Savings rate for the country is an important factor for economic growth –It is, unfortunately, decreasing! –Below 1%

Saving by Nation

The Stock Market –Invest by becoming a part owner of a corporation –Stock represents ownership or equity –Value of stock affected by: Supply and demand Earnings of the company

The Bond Market –A Bond represents debt for a company/government –If you purchase a bond you are a creditor (you have lent $ to the company or govt. –In return, you get interest

Borrowing Government Debt –The government uses borrowing to finance projects such as new schools or highways. –Budget surplus – when a government spends less than it makes. –Budget deficit - when a government spends more than it makes.

Borrowing (cont.) Business Debt –Loans, bonds, and mortgages are common borrowing methods businesses use. –Debt can positively help a business or negatively. Consumer Debt –The use of credit cards can cause debt and trouble for individuals. (

Future Economic Challenges The ability for an economy to produce output determines its growth. The U.S government strives to develop solutions to problems and new technologies.

Key Terms Capital project StockBond Budget Surplus Budget Deficit National Debt

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