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)