1. Economic Activity and Productivity
Economics Pt. 1, Lesson 4

2. Sectors of the Economy
Sectors are different groups of decision makers in our economy
Consumer sector: Individuals earn income to purchase goods and services
Business Sector: businesses offer goods and service for sale, the money they receive for these goods are used to manufacture additional products

3. Sectors of the Economy
Government Sector: government produces goods and services such as national defense and education
Government also purchases goods and services to help them fulfill their job
Government earns revenue by charging tuition, bus fares, etc; how else does govt. get its money?
Foreign Sector: We sell products too and buy products from other countries
Sectors form a circular cycle in our economy

4. Productivity Increased productivity is important
Growth in the economy occurs when a nation’s total output of goods and services increases over time
Productivity: measure of the amount of output produced by a given number of producers
Do we want productivity to increase or decrease? What can cause that?
Everyone one benefits when resources that are scarce are used more efficiently
Increased productivity is important

5. Productivity on the Job
Specialization: takes place when people, businesses, regions, and even countries concentrate on goods and services that they can produce better than anyone else
Specialization improves productivity and efficiency; how?
We all depend on others to produce the things that we consume
Division of Labor: form of specialization, breaking down a job into separate, smaller tasks, which are preformed by other workers
Most people specialize

6. Productivity on the Job
Human capital: the sum of the skills, abilities, and motivation of people
Productivity tends to increase when businesses invest in human capital; why?
Improvement in human capital usually benefits business and individuals
Due to specialization our economy is “interdependent”; risks and rewards
Human capital, such as education, improves a country