1. Introduction to Business Mrs. A

2. Measuring Economic Activity Economic indicators Economic indicators – important data or statistics that measure economic activity and business cycles. change before the rest of the economy does. Leading economic indicators are economic factors or conditions that normally change before the rest of the economy does.

3. Economic Indicators 1.Gross Domestic Product (GDP) – the dollar value of all final goods and services produced in the U.S. in a single year.  Consumer goods and services +  Business goods and services +  Government goods and services +  Good and services sold to other countries = GDP

4. 2.Standard of Living – the amount of goods and services the average person can buy. 3.Unemployment rate – the percentage of the unemployed workforce looking for jobs. rise in level of prices 4.Inflation – a prolonged rise in level of prices for goods and services. 5.Deflation – The general decrease in the cost of goods and services. 8.0% for Colorado Economic Indicators

5. National Debt National Debt – the total amount of money a government owes.  http://zfacts.com/p/461.html http://zfacts.com/p/461.html  http://www.usdebtclock.org/index.html http://www.usdebtclock.org/index.html  Budget deficit – When the government spends more on programs than it collects in taxes.  Budget surplus – When a government’s revenue exceeds its expenditures during a one year period.

6. The Business Cycle The repeated rise and fall of economic activity over time.  Prosperity – the highest level of economic activity in a cycle  Recession – a period of severe economic decline – spending decreases, so fewer goods and services are demanded, and unemployment rises  Depression or Trough – a very severe recession that lasts for several years  Recovery – a period of economic growth or expansion following a recession or depression

7. Business Cycle

8. The Ripple Effect A recession can affect one industry, related industries, or spread to an entire economy. For Example:  Auto Industry Recession  Steel, Rubber, Plastic, Carpet, Leather, Workers, Stockholders  Gas Prices Go Up  Drivers, Truckers, Food Prices, raw material prices