1. Measuring Economic Activity

2. Measuring Economic Activity
Goal 1 Define gross domestic product.
Goal 2 Describe economic measures of labor.
Goal 3 Identify economic indicators for consumer spending.

3. KEY TERMS Gross Domestic Product (GDP) GDP per capita
unemployment rate
productivity
personal income
retail sales

4. GROSS DOMESTIC PRODUCT (GDP)
Components of GDP
Consumer spending for food, clothing, housing, and other aspect
Business spending for buildings, equipment and inventory items
Government spending to pay employees and to buy supplies and other goods and services
The exports of a country less the imports into the country

5. GROSS DOMESTIC PRODUCT (GDP)
Comparing GDP
Total monetary value of GDP isn’t the full story
Per capita – dividing total GDP by total population
Increase in GDP per capita means the economy is growing
Decrease in GDP per capita means the economy is facing difficulties

6. COMPARISON OF GDP IN SELECTED COUNTRIES

7. COMPARING GROSS DOMESTIC PRODUCT

8. 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.

9. LABOR ACTIVITIES Employment
Labor force consists of all people over the age of 16 who are actively working or seeking work
Students, retired people, and others who cannot or do not wish to work are not included
Unemployment rate is the portion of people in the labor force who are not working
Main cause is reduced demand for goods and services
If few people travel by bus, bus companies need fewer workers

10. LABOR ACTIVITIES Productivity
Is the production output in relation to a unit of input
Improvements in capital resources (equipment and technology), worker training, and management techniques can result in more output per worker.
If wages increase faster than gains in productivity the cost of goods/services increases – workers still not able to improve their standard of living
For this reason, strong attention has been focused on motivating workers to increase productivity which will allow them to increase their standard of living.

11. Checkpoint  How can productivity be increased?
Productivity can be increased by improvements in capital resources (equipment and technology), worker training, and management techniques.

12. CONSUMER SPENDING Personal income Retail sales
Salaries, wages, investment income, and government payments
Retail sales
Sales of durable and non-durable goods bought by consumers
Indicator of general consumer spending patterns in the economy
Increasing sales usually points toward economic growth

13. Checkpoint  What are the main sources of personal income?
Sources of personal income include wages, salaries, investment income, and government payments