Government, Business and People

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Economics
Chapter 3 Government, Business and People
Cardinals!
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Supply
Law of Supply
Supply the willingness and ability of producers
to provide goods and services at different
prices.
Law of Supply the principle that suppliers will
normally offer more for sale at higher prices and
less at lower prices
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Law of Supply
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Demand
Law of Demand
Law of Demand the quantities of goods and
services that consumers will purchase at various
prices.
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Law of Demand
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Government
Nation Income
Tariffs government charges for on goods
imported into the United States
Sales Tax money paid on purchases of goods and
services. Differ by state
Income Tax the percentage of an individuals
income
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Types of Taxes
Chapter 2
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Learning Objectives

• Identify the differences between GDP and GNP
• Determine how to compute the National GDP
• Explain the business cycle and its pattern
• Understand the concept of inflation

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The Business Cycle
Business cycles are dated according to when the
direction of economic activity changes and is
measured by the time it takes for an economy to
go from one peak to another. 
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The Business Cycle
An expansion is one of two basic business cycle
phases. The other is contraction. The transition
from expansion to contraction is termed a "peak"
and the changeover from contraction to expansion
is a trough. Expansions last on average about
three to four years but have been known to last
anywhere from 12 months to more than 10 years. 
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Components of the Business Cycle
Slump period of poor performance or inactivity
in an economy, market or industry specifically
refers to a recession, signaling a slow down of
business activity.
Financial markets investments in the stock
market declines which lead to share prices and
trading volume will usually go lower.
Industry may experience a slow down in overall
activity. From the selling of goods to banks
loaning money.
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Components of the Business Cycle
Trough the marking of the end of a period of
declining business activity and the transition to
expansion.
Financial markets investments in the stock
market declines which lead to share prices and
trading volume will usually go lower.
Industry may experience a slow down in overall
activity. From the selling of goods to banks
loaning money.
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Components of the Business Cycle
Peak The highest point between the end of an
economic expansion and the start of a contraction
in a business cycle. The peak of the cycle refers
to the last month before several key economic
indicators, such as employment and new housing
starts, begin to fall. It is at this point
that real GDP spending in an economy is its
highest level.
Usually a time of spending, production increases,
lending occurs more easily, bull markets,
unemployment levels drop, housing industry
activity increases
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Components of the Business Cycle
Expansion The phase of the business cycle when
the economy moves from a trough to a peak. It is
a period when business activity surges and gross
domestic product expands until it reaches a
peak.  Also Known as Economic Recovery
Usually a time of spending, production increases,
lending occurs more easily, bull markets,
unemployment levels drop, housing industry
activity increases
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Components of the Business Cycle
Contraction A phase of the business cycle in
which the economy as a whole is in decline. More
specifically, contraction occurs after the
business cycle peaks, but before it becomes a
trough. According to most economists, a
contraction is said to occur when a country's
real GDP has declined for two or more
consecutive quarters.  
For most people, a contraction in the economy can
be source of economic hardship as the economy
plunges into a contraction, people start losing
their jobs, spending slow dramatically, housing
constructions slows of stops, lending virtually
ceases, production can slow significantly, bull
markets.
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Components of the Business Cycle
Recession A significant decline in activity
across the economy, lasting longer than a few
months. It is visible in industrial production,
employment, real income and wholesale-retail. The
technical indicator of a recession is two
consecutive quarters of negative economic growth
as measured by a country's gross domestic product
(GDP).
A normal part of the business cycle however,
one-time crisis events can often trigger the
onset of a recession. A recession generally lasts
from six to 18 months. Interest rates usually
fall in recessionary times to stimulate the
economy by offering cheap rates at which to
borrow money.
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The Great Depression
An economic recession that began on October 29,
1929, following the crash of the U.S. stock
market. The Great Depression originated in the
United States, but quickly spread to Europe and
the rest of the world. Lasting nearly a decade,
the Depression caused massive levels of poverty,
hunger, unemployment and political unrest. The
NYSE crashed on October 24, 1929, a day known as
Black Thursday. Thousands of people lost nearly
the entire value of their investments, leaving
them with next to nothing. The trend continued
and the following Tuesday, Black Tuesday, the
DJIA dropped 12, marking the start of the great
depression. International trade declined, along
with personal income, tax revenues and product
prices. Many economists believed the Great
Depression was evidence that capitalism, when
left unchecked, is a dangerous ideology. This
caused some nations to change their political
structures, such as Germany, who adopted fascism.
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Deflation
Deflation A general decline in prices, often
caused by a reduction in the supply of money or
credit. Deflation can be caused also by a
decrease in government, personal or investment
spending. The opposite of inflation, deflation
has the side effect of increased unemployment
since there is a lower level of demand in the
economy, which can lead to an economic
depression.
Declining prices, if they persist, generally
create a vicious spiral of negatives such as
falling profits,  closing factories, shrinking
employment and incomes, and increasing defaults
on loans by companies and individuals. To counter
deflation, the Federal Reserve (the Fed) can
use monetary policy to increase the money supply
and deliberately induce rising prices, causing
inflation. Rising prices provide an essential
lubricant for any sustained recovery because
businesses increase profits and take some of the
depressive pressures off wages and debtors of
every kind. 
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Gross Domestic Product
The monetary value of all the finished goods and
services produced within a country's borders in a
specific time period. Commonly calculated on an
annual basis. It includes all of private and
public consumption, government outlays,
investments and exports less imports that occur
within a defined territory. GDP C G I
NXwhere"C" is equal to all private
consumption, or consumer spending, in a nation's
economy"G" is the sum of government spending"I"
is the sum of all the country's businesses
spending on capital"NX" is the nation's total
net exports, calculated as total exports minus
total imports. (NX Exports - Imports)
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Inflation
Inflation The rate at which the general level of
prices for goods and services is rising, and,
subsequently, purchasing power is falling.
As inflation rises, every dollar will buy a
smaller percentage of a good. For example, if the
inflation rate is 2, then a 1 pack of gum will
cost 1.02 in a year.
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Computing the GDP
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Inflation
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Inflation
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Inflations Impact on the GDP
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GDP Growth
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Learning Objectives

• Explain the difference between salary and hourly
  wages
• Compare and contrast the collars of employment
• Identify where job openings are posted
• Identify the different job industries

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Collars of Employment
manual labor construction and factory work
less labor once thought to be dominated by
women secretary, operators, waitress
supervisor entry level and mid level
management
CEO top of the food chain
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Measuring a Countries Economic Growth
Nation Finances
GDP the dollar amount of all final goods and
services produced within a nations borders in a
year. Computed every quarter-three (3) months
GNP the dollar amount of all final goods,
services and structures produced in one (1) year
with labor and property supplied by a countrys
residence
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Job Fields / Industries

• Healthcare doctors, pharmaceutical and nurses
• Education teachers, professors, administrators
• Communications radio, television and
  newspapers
• Government county offices, mayors, senate
• Retail department stores,
• Financial accounting and banks

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Where are the Jobs

• Career centers at university and colleges
• Headhunter
• Newspapers
• Internet
• Word of mouth

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Job Requirements

• Education B.S., M.A., Certifications
• Degree
• Commitment
• Experience - of years
• Communication skills
• Written
• Oral
• Organization
• Microsoft programs
• Leadership (not manage)
• Team member
• Relocation

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Income
Personal Income
The money a persons earns a set period
Hourly a set amount of money to be paid to an
employee for a hours worth of work
Salary a negotiated set amount of money to be
earn over a year period
Minimal wage
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Benefits

• Vacations paid, holiday and sick days
• Insurance health and life
• Stock options
• Overtime
• Company car
• Relocation allowance

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Benefits
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