1. 3.03Explain economic measurements and the business (economic) cycle

2. Labor Productivity The amount produced per worker measured during a specific time period. The amount produced per worker measured during a specific time period. –Training increases productivity. –Incentives increase productivity. –Specific task. –Increased productivity=increased profits. Example: Packing computers Example: Packing computers

3. Gross Domestic Product (GDP) A measure of the goods and services produced IN a country. A measure of the goods and services produced IN a country.

4. Gross National Product (GNP) The sum of the dollar value for products produced BY a country The sum of the dollar value for products produced BY a country (includes citizens/companies abroad) (includes citizens/companies abroad) Example: Briggs and Stratton Example: Briggs and Stratton (US and Japan) (US and Japan)

5. Standard of Living Amount of goods and services available. Amount of goods and services available. Example: United States vs. Ethiopia Example: United States vs. Ethiopia

6. Inflation Rate The rate at which prices are rising. The rate at which prices are rising. Stable rate- 1-5% inflation rate per year. Stable rate- 1-5% inflation rate per year. Interest rates- the government tries to discourage borrowing money by raising interest rates. Interest rates- the government tries to discourage borrowing money by raising interest rates.

7. Unemployment Rate (Total number of people willing/able to work but cannot find a job) divided by (Total number of people who are able/willing to work, including employed and unemployed) (Total number of people who are able/willing to work, including employed and unemployed)

8. Business Cycle The movement of an economy through four recurring phases: – –Expansion – –Recession – –Depression – –Recovery

9. Expansion Highest period of economic growth. Low unemployment. High production of goods/services. High consumer spending.

10. Recession Economic slowdown. Rise in unemployment. Production slows down. Decrease in consumer spending.

11. Depression Prolonged recession. High unemployment. Drastic decrease in production. Extremely low consumer spending. Poverty can result.

12. Recovery Renewed economic growth. Increase in employment. Increase in production. Increase in consumer spending. Moderate business expansion.