2. Production and Productivity

3. GDP is the market value of all goods and services produced in a nation’s economy during a given time. It is made up of consumer, investment, and government spending.

4. Does indicate the size of a nation’s economy, but does not measure the well-being of a population. It cannot measure accurately changes in production from year to year.

5. A rise in prices, meaning, it costs more money to buy the same goods. Between 1960 and 1998, GDP rose 16x. However, there were not 16x more goods produced during that time period.

6. Productivity is the output of goods and services as measured per unit of input— time, workers, capital resources, etc. Labor Productivity is the amount the work force can produce in a given time. When productivity rises, people produce more with the same resources.

7. New management ideas have been implemented over the last 100 years to improve productivity: Some of these ideas include customer satisfaction, high-quality workmanship, employee involvement, and shared vision.

8. The free enterprise system has given business owners incentive to risk more money on capital resources. The value of equipment per worker has risen 148% over the last 40 years!