Copyright © 2007 South-Western. All rights reserved. Chapter 3 Assessing Economic Conditions

Copyright © 2007 South-Western. All rights reserved.

Chapter 3Assessing Economic Conditions


Assessing Economic Conditions

Portion of Graphic from pg 72 will go

here

Learning Objectives

Assessing EconomicConditions

Growth Inflation

Government Interest Rates

Market Prices




here

The Key Decisions in Running a Business




here

Economic Growth

GrowthInflationInterest RatesMarket PricesGovernment

Weak

Strong

Recession




here

Growth Indicators


G.D.P.

Production

AggregateExpenditures

Spending




here

Unemployment


Structural

Frictional

Cyclical

Seasonal




here

Inflation

1985

1995

2005

$

$$$$$GrowthInflationInterest RatesMarket PricesGovernment




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Types of Inflation


Demand-PullCost-Push




here

Interest Rates





here

Interest and Revenue


Interest Rates (%)




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Determining Market Prices


Insert Exhibit 3.4(only top portion)




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Determining Market Prices

GrowthInflationInterest RatesMarket PricesGovernment Insert Exhibit 3.4

(only bottom graph portion)




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Demand Schedule


Pri

ce

Quantity

(S1)

(D1)(D2)

P1 = $ 2,000

P2 = $ 2,500




here

Supply Schedule


Pri

ce

Quantity

(S1)

(D1)

(S2)

P1 = $ 2,000

P2 = $ 1,500




here

Influencing Market Prices


Production Expenses

Consumer Income

Consumer Preferences)))) ) )




here

Monetary Policy


FOMC

The Fed

Money supply

Interest Rates




here

Fiscal Policy


Excise Tax

Personal Income Tax

Corporate Tax

Budget Deficits




here

Government Influence


Insert Exhibit 3.8

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Copyright © 2007 South-Western. All rights reserved. Chapter 3 Assessing Economic Conditions