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Chapter 2Measuring Economic Activity
GDP• Gross Domestic Product• Total dollar value of all final goods and
services produced in a country during one year.
GDP per capita• Gross Domestic Product• Output per person• Divide GDP by the total population
Unemployment Rate• The portion of people in the labor force who
are not working.• People are considered unemployed if they are
looking for work and willing to work but unable to find a job.
Productivity• Output per worker• Examples:
Improvements in equipment or technology, training, management techniques, etc.
Personal Income• Salaries and wages as
well as investment income and government payments to individuals.
• Provide foundation for buying goods and services.
Retail Sales• Sales of durable and non-duralable goods
bought by consumers.• Indicator of general consumer spending
Business Cycle
PROSPERITY RECESSION
DEPRESSION RECOVERY
Business Cycle
PROSPERITY• Period in which most people who want
to are working• Businesses produce goods and services
in record numbers, wages are good, and the rate of GDP growth increases.
Business Cycle
RECESSION• A period in which demand begins
to decrease, business lower production
• Unemployment begins to rise• GDP growth slows
Business Cycle
DEPRESSION• A phase marked by a prolonged
period of high unemployment• Weak consumers sales• Business failures
Business Cycle
RECOVERY• A phase in which unemployment
begins to decrease• Demand for goods and services
increases• GDP begins to rise
Inflation• An increase in the
general level of prices.• Buying power of the
dollar decreases
Deflation• Decrease in general level of prices• Usually happens with investment rates
National Debt• The total amount owned by the federal
government
Chapter 1 and 2 REVIEW
In your book…Communicate Business ConceptsChapter 1 – 1, 2, and 5 (pg 28)Chapter 2 – 1, 4, and 5 (pg 48)