1. Business Administration & Management Mr. Bernstein Managing An Economy, pp 71-76 February 24, 2015

2. Business Administration & Management Mr. Bernstein How Can An Economy Grow? Growth in Population Increased Productivity Per Person Increase Exports Decrease Imports 2

3. Business Administration & Management Mr. Bernstein Key Economic Indicators GDP – Gross Domestic Product CPI, PPI – Inflation measures Leading Indicators Unemployment Rate Retail Sales Personal Income and Consumption Measured, Used and Released by the Government 3

4. Business Administration & Management Mr. Bernstein Inflation Rise in prices caused by imbalance between supply and demand Results in a decline in the purchasing power of a dollar Is determined by psychology as well as supply and demand – expectations matter Maintaining low inflation is a primary goal of our government’s monetary policy Which is worse – inflation or deflation? 4

5. Business Administration & Management Mr. Bernstein US CPI, 1998- 2012 5

6. Business Administration & Management Mr. Bernstein Business Cycle: Expansion and Contraction of GDP Can be driven by psychology The government attempts to influence via monetary and fiscal policy Policy must balance GDP goals against the risk of inflation 6

7. Business Administration & Management Mr. Bernstein US GDP, 1950- 2012 7