1. 2-1: Measuring Economic Activity
Intro To Business
2-1: Measuring Economic Activity

2. Goals Define gross domestic product.
Describe economic measures of labor
Identify economic indicators for consumer spending.

3. Gross Domestic Product
The most widely used measure for economic growth is Gross Domestic Product or GDP.
It is the total dollar value of all final goods and services produced in a country during one year.
“One way to find out how well an economy is doing is to compare output from year to year”

4. Final Goods GDP measures final products produced not:
Intermediate goods in manufacturing, such as:
Steel
Fabrics
If intermediate goods were counted, they would be counted twice.

5. Components of GDP Includes four major categories of economic activity
Consumer Spending for food, clothing, etc.
Business Spending for buildings, equipment, and inventory items
Government Spending to pay employees, buy supplies and other goods and services.
Exports of a country less than the imports into a country (net exports)
Services performed for self are not included in GDP (mowing your own lawn)

6. Comparing GDP Increasing GDP usually signals a healthy economy
$17.96 trillion!
Increasing GDP usually signals a healthy economy
Dollar value of GDP as a measure of economic growth is not the best method
GDP per capita =output per person, or GDP ÷ by the total population ($59,000)
Increase of GDP per capita signifies a growing economy

7. Workers of a country contribute to the economy in several ways:
Labor Activities
Workers of a country contribute to the economy in several ways:
*Labor activities create needed goods and services *Wages they receive are spent to create demand for various items

8. Employment
million working in U.S.
U.S. labor force consists of all people above age 16 who are working/seeking work
Statistic of most concern is the unemployment rate, (the portion of people in the labor force who are not working)
The main cause of unemployment is reduced demand for goods/services being provided by various workers.

9. Productivity
Productivity is the production output in relation to a unit of input, such as a worker
Improvements in capital resources, worker training, and management techniques can result in more output per worker.
In the 1890s, the average worker worked 60 hours/week!

10. Consumer Spending
Personal income refers to salaries and wages as well as investment income and government payments to individuals.
The U.S. Dept. of Commerce measures retail sales, or the sales of durable and nondurable goods bought by consumers.
Indicator of general consumer spending patterns in the economy.

11. Check it Out! http://www.bea.gov/ Releases: At a Glance:
GDP by State
Trade in Goods & Services
At a Glance:

12. Labor Stats http://www.bls.gov/ National rate? How is MI doing?
Consumer Price Index