1. Chapter 3.2
The Economy and Marketing

2. What have you heard about our economy lately?
3. Economic Measurements
A healthy economy has 3 goals
Increase productivity
Decrease unemployment
Maintain stable prices
Nations routinely use measurements to determine their economic strength
4. Productivity
Is output per worker measure over specific time period
Business cans increase productivity by
Investing (in new equipment or facilities)
Provide employee training
Reduce # of workforce and increase responsibilities
*specialization & division of
labor are key
(think assembly line)*
5. Gross Domestic Product (GDP)
Output of goods and services produced by labor and property
Made up of:
Govt spending
Personal spending
Net exports of goods and services
Change in business inventories
6. Standard of Living
Measurement of the amount and quality of goods and services that a nations people have
Reflects quality of life
7. Inflation Rate
Refers to rising prices (low = 1-5% per year is good)
Money looses value when inflation gets too high
Govttries to control this
2 Measures:
Consumer Price Index (CPI) :
measures change in price over period of time for some 400 retail goods used(cost of living index)
Producer Price Index (PPI):
Measures wholesale price levels
8. Unemployment Rate
All nations chart this
The higher the unemployment rate the greater the chance of economic slowdown
9. Recession vs. Depression
Depression
Recession
Period of prolonged recession
Nearly impossible to find a job
Businesses forced to shut down
Low spending
Results in poverty
Period of economic slowdown
Lasts 2 quarters or 6 months
Consumers spend less $
Companies reduce workforce
Future plans for spending are put on hold