Economic Activity in a Changing World Chapter 3 pp

Introduction to Business, Economic Activity in a Changing World Slide 2 of 55 Gross Domestic Product (GDP) One way of telling how well an economy is performing is to determine how many goods and services it produces during a certain period of time.

Introduction to Business, Economic Activity in a Changing World Slide 3 of 55 Gross Domestic Product (GDP) The standard of living is the amount of goods and services the average citizen can buy.

Introduction to Business, Economic Activity in a Changing World Slide 4 of 55 Rate of Inflation Inflation is a general increase in the cost of goods and services. Inflation can happen when an economy actually becomes too productive.

Introduction to Business, Economic Activity in a Changing World Slide 5 of 55 Rate of Inflation Deflation is a general decrease in the cost of goods and services. When an economy produces more goods than people want, it has to lower prices and cut production.

Introduction to Business, Economic Activity in a Changing World Slide 6 of 55 National Debt When the government spends more on programs than it collects in taxes, the difference in the amount is called the budget deficit.

Introduction to Business, Economic Activity in a Changing World Slide 7 of 55 National Debt The total amount of money a government owes is its national debt. If the debt gets too large, a nation can become dependent on other nations or unable to borrow any more money.

Introduction to Business, Economic Activity in a Changing World Slide 8 of 55 National Debt If a nation spends less than its income, it has a budget surplus. The government will probably use a surplus to cut taxes, reduce the national debt, or increase spending for certain programs.

Introduction to Business, Economic Activity in a Changing World Slide 9 of 55 The Business Cycle Over long periods of time economic changes seem to form patterns. The rise and fall of economic activity over time is called the business cycle.

Introduction to Business, Economic Activity in a Changing World Slide 10 of 55 Figure 3.2 BUSINESS CYCLE MODEL The repeated rise and fall of economic activity over time is called a business cycle. What are the four phases of the cycle?

Introduction to Business, Economic Activity in a Changing World Slide 11 of 55 Measuring Economic Activity Economic indicators are figures used to measure economic performance.

Introduction to Business, Economic Activity in a Changing World Slide 12 of 55 Measuring Economic Activity Economic indicators measure things like how much a country is producing, whether its economy is growing, and how it compares to other countries.

Introduction to Business, Economic Activity in a Changing World Slide 13 of 55 Unemployment Rate The unemployment rate measures the number of people who are able to work but don’t have a job during a given period of time.