Money Matters

  1. Home
  2. Course Description
  3. Chapter 1 - Economic Decisions and Systems
  4. Chapter 2 - Economic Activity
  5. Chapter 3 - Business in the Global Economy
  6. Ch 4 - Social Responsibility of Business and Government
  7. Ch 5 - Business Organization
  8. Ch 6 - Entrepreneurship and Small Business Management
  9. Resource Assignments
  10. Semester Study Guides & Exams
  11. Ch 7 - Management and Leadership
  12. Ch 8 Human Resources
  13. Ch 9 - Career Planning and Development
  14. Ch 10 - Marketing
  15. Ch 12 - Financial Management
  16. Ch 14 - Risk Management
  17. Ch 15 - Consumers in the Global Economy
  18. Ch 16 - Money Management & Financial Planning
  19. Ch 17 - Banking and Financial Services
  1. 2-1
  2. 2-2
  3. 2-3

2-3

Goals:

  • Discuss investment activities that promote economic growth
  • Explain borrowing activities by government, business, and consumers
  • Describe future concerns of economic growth  

Key Terms:

  • capital project
  • stock
  • bond
  • budget surplus
  • budget deficit
  • national debt

Lesson 2-3    Other Measures of Business Activity          

  • Investment Activities – investing in the future can happen in several ways. Your time in school is an investment in your future. When companies buy buildings and equipment, they are also investing in their future.
  • Capital Spending – refers to money spent by a business for an item that will be used over a long period.
  • Capital Projects – involve spending by businesses for items such as land, buildings, equipment, and new products. The money for capital projects comes from three main sources:
  • Personal Savings
    • Major source of investment funds
    • Provide the funds necessary for buying expensive equipment or creating new products
    • Savers are paid interest on the money they deposit
    • Savings rate of a country is an important factor for economic growth
    • US savings rate has been quite low in recent years, often below 1% - this causes economic concerns for the future
  • Stock Market       
    • Stock - represents ownership in a corporation.
    • Many people invest by becoming part owners of corporation.
    • Stock ownership is called “equity”, which means “ownership”
    • The value of shares of stock is affected by many factors
    • Supply and demand
    • If company earning are high, more people will want to own the stock – stock prices goes up
  • Bond Market
    • Another investment activity involves the sale of bonds.
    • Bonds represent debt for an organization
    • If you purchase a corporate or government, you are a creditor.
    • You have loaned money to an organization.
    • In return, bondholders are paid interest for the use of their money.
  • Borrowing
  • Government Debt
  • Borrowing by governments, businesses, and consumers can have an important economic influence
  • People expect services from federal, state and local governments
  • These services cost money
  • Often governments borrow money to finance various project
    • New schools
    • Public buildings
    • Highway
  • Budget Surplus – occurs when a government spends less than it takes in
    • May reduce taxes
    • Increase spending
  • Budget Deficit – Occurs when a government spends more than it takes in
  • National Debt – the total amount owed by the federal government
  • Business Debt
  • Loans, bonds, and mortgages are common borrowing methods used by businesses
  • Efficient use of borrowing can be helpful to companies
  • Using the funds of others can help expand sales and profits
  • Sometimes, when poor decisions are made, debt created problems
  • Poor debt management can result in a company going out of business
  • Consumer Debt
  • People commonly use credit cards, auto loans, and homwe mortgages to finance their purchases
    • Convenient
    • Overuse can result in financial difficulties for individuals and families
    • Careful use of credit can be important for economic growth
  • Future Economic Challenges
  • The ability of an economy to produce output determines growth
  • The private enterprise system in the United States has worked quite well
  • Government leaders and citizens know that it can be made to work even better
  • Adequate health care
  • Proper housing
  • Traffic
  • Crime
  • Education
  • Unemployment
  • No one knows for sure what the economic future holds
  • To maintain our standard of living and prevent unemployment, economic growth is needed
    • Provides jobs
    • Allows people the opportunity to better meet their needs and wants

 

Assignments:

Go to Cengage Learning (use the link below).
From the drop down menu select Chapter 2.
1 - Complete, print out and turn in the Crossword Puzzle
2 - Take the Online Quiz Prep, show your test score to the teacher.
3 - Go to PortFolio Activities and complete:
     Lesson 1 - Measuring Economic Activities
     Lesson 2 - Economic Change
     Lesson 3 - Other Measures of Business Activities
Show your scores to the teacher on screen.

 

 

 

 

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Web Links:
  1. Cengage Learning Cengage Learning
Author: Pat Rox
Last modified: 6/6/2013 6:55 AM (EDT)