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2-3 Other Measures of Business Activity
Goals
Discuss investment activities that promote economic growth.
Explain borrowing activities by government, business, and consumers.
Describe future concerns of economic growth.
Investment ActivitiesCapital Spending – refers to the money spent by a business for an item that will be used over a long period.
Capital Projects – involved spending by businesses for items such as land, buildings, equipment, and new products
The money for capital projects comes from 3 sources: Personal savings, stock investments and bonds
Personal Savings
– A major source of investment funds– It’s the money you deposit in a bank– You receive interest
Savings rate for the country is an important factor for economic growth– It is, unfortunately, decreasing!– Below 1%
Saving by Nation
The Stock Market
– Invest by becoming a part owner of a corporation
– Stock represents ownership or equitywww.yahoo.com
– Value of stock affected by:Supply and demand
Earnings of the company
The Bond Market
– A Bond represents debt for a company/government
– If you purchase a bond you are a creditor (you have lent $ to the company or govt.
– In return, you get interest
Borrowing
Government Debt– The government uses borrowing to finance projects
such as new schools or highways. – Budget surplus – when a government spends less
than it makes.– Budget deficit - when a government spends more
than it makes.
Borrowing (cont.)
Business Debt– Loans, bonds, and mortgages are common borrowing
methods businesses use. – Debt can positively help a business or negatively.
Consumer Debt– The use of credit cards can cause debt and trouble
for individuals. (www.chasecreditcards.com)
Future Economic Challenges
The ability for an economy to produce output determines its growth.
The U.S government strives to develop solutions to problems and new technologies.
Key Terms
Capital project
Stock
Bond
Budget Surplus
Budget Deficit
National Debt
Now it’s time to……….
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