Economic Activity.pptVIP

2 CHAPTER 2 ITB 2-1 Measuring Economic Activity Goal 1 Define gross domestic product. Goal 2 Describe economic measures of labor. Goal 3 Identify economic indicators for consumer spending. KEY TERMS Gross Domestic Product GDP GDP per capita unemployment rate productivity personal income retail sales GROSS DOMESTIC PRODUCT GDP Components of GDP Comparing GDP COMPARISON OF GDP IN SELECTED COUNTRIES COMPARING GROSS DOMESTIC PRODUCT Checkpoint ? What types of economic activities are not included in GDP? 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. LABOR ACTIVITIES Employment Productivity Checkpoint ? How can productivity be increased? Productivity can be increased by improvements in capital resources equipment and technology , worker training, and management techniques. CONSUMER SPENDING Personal income Retail sales Checkpoint ? What are the main sources of personal income? Sources of personal income include wages, salaries, investment income, and government payments. 2-2 Economic Conditions Change Goal 1 Describe the four phases of the business cycle. Goal 2 Explain causes of inflation and deflation. Goal 3 Identify the importance of interest rates. KEY TERMS business cycle prosperity recession depression recovery inflation price index deflation THE BUSINESS CYCLE Prosperity Recession Depression Recovery Checkpoint ? What are the four phases of the business cycle? Prosperity Recession Depression Recovery CONSUMER PRICES Inflation Causes of inflation Measuring inflation Deflation Checkpoint ? What are the main causes of inflation? Inflation is an increase in the general level of prices that occurs when the demand for goods and services is greater than supply. INTEREST RATES Types of interest rates Changing interest rates Checkpoint ? How do interest rates affect business a