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Economic Activity

CHAPTER 2. Economic Activity. 2-1 Measuring Economic Activity 2-2 Economic Conditions Change 2-3 Other Measures of Business Activity. 2-1. Measuring Economic Activity. Goals Define gross domestic product. Describe economic measures of labor.

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Economic Activity

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  1. CHAPTER 2 Economic Activity 2-1Measuring Economic Activity 2-2Economic Conditions Change 2-3Other Measures of Business Activity

  2. 2-1 Measuring Economic Activity Goals Define gross domestic product. Describe economic measures of labor. Identify economic indicators for consumer spending.

  3. Chapter 2 Key Terms • Gross Domestic Product (GDP) • GDP per capita • unemployment rate • productivity • personal income • retail sales

  4. Chapter 2 GROSS DOMESTIC PRODUCT (GDP) • Components of GDP • Comparing GDP

  5. Comparison of GDP in Selected Countries Source:CIA World Factbook Chapter 2

  6. What types of economic activities are not included in GDP? Answer GDP only applies to reported final goods and services. Money earned for goods or services that are not reported would not be included. Goods and services used in the manufacture of other products are only counted once—in the final product. Chapter 2 Checkpoint >>

  7. Chapter 2 LABOR ACTIVITIES • Employment • Productivity

  8. How can productivity be increased? Chapter 2 Checkpoint >> Answer • Productivity can be increased by improvements in capital resources (equipment and technology), worker training, and management techniques.

  9. Chapter 2 CONSUMER SPENDING • Personal income • Retail sales

  10. What are the main sources of personal income? Chapter 2 Checkpoint >> Answer • Sources of personal income include wages, salaries, investment income, and government payments.

  11. 2-2 Economic Conditions Change Goals Describe the four phases of the business cycle. Explain causes of inflation and deflation. Identify the importance of interest rates.

  12. recovery inflation price index deflation Chapter 2 Key Terms • business cycle • prosperity • recession • depression

  13. Chapter 2 THE BUSINESS CYCLE • Prosperity • Recession • Depression • Recovery

  14. What are the four phases of the business cycle? Chapter 2 Checkpoint >> Answer • The four phases of the business cycle are prosperity, recession, depression, and recovery.

  15. Chapter 2 CONSUMER PRICES • Inflation • Causes of inflation • Measuring inflation • Deflation

  16. What are the main causes of inflation? Chapter 2 Checkpoint >> Answer • Inflation is an increase in the general level of prices that occurs when the demand for goods and services is greater than supply.

  17. Chapter 2 INTEREST RATES • Types of interest rates • Changing interest rates

  18. How do interest rates affect business activities in our economy? Chapter 2 Checkpoint >> Answer • Interest rates can encourage or discourage borrowing and spending. • Lower interest rates allow consumers greater spending power, which increases demand, productivity, and employment. • Businesses often pass on the cost of higher interest rates to consumers.

  19. 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.

  20. Chapter 2 Key Terms • capital project • stock • bond • budget surplus • budget deficit • national debt

  21. Chapter 2 INVESTMENT ACTIVITIES • Personal savings • The stock market • The bond market

  22. Name some examples of capital projects. Chapter 2 Checkpoint >> Answer • Capital projects include the purchase of any item a business will use over an extended period of time such as land, buildings, and equipment.

  23. Chapter 2 BORROWING • Government debt • Business debt • Consumer debt

  24. What is the cause of a budget deficit? Chapter 2 Checkpoint >> Answer • A budget deficit occurs when a government or organization spends more than it takes in.

  25. Chapter 2 FUTURE ECONOMIC CHALLENGES • Limited access to health care • Need for proper housing for many people • Traffic and crime • Unemployment

  26. Checkpoint >> What economic challenges do countries face in the future? Chapter 2 Answer • Future economic concerns for any country include the ability to increase its output and provide a means for its citizens to meet the basic needs of food and shelter, adequate health care, education, transportation, employment, and safety.

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