2-3 Other Measures of Business Activity. Goals Discuss investment activities that promote economic...
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Transcript of 2-3 Other Measures of Business Activity. Goals Discuss investment activities that promote economic...
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2-3 Other Measures of Business Activity
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Goals
Discuss investment activities that promote economic growth.
Explain borrowing activities by government, business, and consumers.
Describe future concerns of economic growth.
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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
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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%
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Saving by Nation
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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
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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
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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.
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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)
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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.
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Key Terms
Capital project
Stock
Bond
Budget Surplus
Budget Deficit
National Debt
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Now it’s time to……….
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