Beruflich Dokumente
Kultur Dokumente
Radebaugh
Sullivan
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Chapter 4
The Economic Environments Facing Business
Copyright 2013 Pearson Education 4-2
Learning Objectives
To communicate the importance of economic analysis To discuss the idea of economic freedom To profile the characteristics of the types of economic systems To introduce the notion of state capitalism To profile indicators of economic development, performance, and potential
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Introduction
Learning Objective 1: To communicate the importance of economic analysis
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Introduction
Countries differ in different ways Economic and political changes alter market circumstances It is important to understand connections, change, and consequences The challenges of the comeback Choices of citizens, policymakers, and institutions
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it is difficult to stipulate a definitive set of indicators to estimate the performance and potential of a countrys economy todays set of perfect measures may prove imperfect tomorrow interdependencies complicate interpreting the relationship among elements of the economic environment
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Economic Freedom
Learning Objective 2: To discuss the idea of economic freedom
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Economic Freedom
Economic freedom people have the right to work, produce, consume, save, and invest the way they prefer
measured across business freedom, monetary freedom, fiscal freedom, investment freedom, freedom from corruption, property rights, trade freedom, government size, financial freedom, and labor freedom
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Economic Freedom
Economic Freedom by Region, with Population
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Economic Freedom
Global Distribution of Economic Freedom
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Growth rates Productivity Income levels Inflation Employment Life expectancy Literacy Political openness Environmental sustainability
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Questions about the legitimacy of free markets The benefits of more state control
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Market Economy
In a market economy individuals rather than governments make most economic decisions
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Command Economy
Learning Objective 4: To introduce the notion of state capitalism
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Command Economy
In a command economy the visible hand of the state supersedes the invisible hand of individuals
Communism
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Mixed Economy
Socialism
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State capitalism refers to a system in which the government explicitly manipulates market outcomes for political purposes
promote certain industries to encourage economic development develop national companies into global leaders foreign companies restricted from strategic industries
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developing countries largest number of countries low per capita income emerging economies fast growing, relatively prosperous BRICs Brazil, Russia, India, and China developed countries high per capita income and standard of living like the U.S., Japan, France, Australia
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the broadest measure of economic activity for a country the total value of all final goods and services produced within a nation in a particular year
the total market value of goods and services produced by workers and capital within a nations borders
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Improving Analysis
GNI data should be adjusted for the growth rate of the economy the number of people in a country the local cost of living
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Improving Analysis
GNI per capita, 2009
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Improving Analysis
GNI per capita adjusted for Purchasing Power Parity
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Green economics
gauge economic performance in terms of the effect of current choices on long-term sustainability meet the needs of the present without compromising the ability of future generations to meet their own needs
importance of emotional prosperity in addition to financial prosperity
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Sustainable development
Happynomics
Features of an Economy
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Inflation
Inflation
Deflation
Reflation
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Unemployment
Unemployment rate
share of unemployed workers seeking employment for pay relative to the total civilian labor force
the sum of a countrys inflation and unemployment rates
Misery index
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Debt
Debt
Income Distribution
Income distribution
estimates the proportion of the population that earns various levels of income measures the extent to which the distribution of resources deviates from a perfectly equal distribution
Gini coefficient
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Poverty
Poverty the state of having little or no money and few or no material possessions
extreme poverty less than $1.25 per day moderate poverty less than $2.00 per day
Today the world population is 80% poor, 10% middle income, and 10% rich Base of the Pyramid
Frugal engineering
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Balance of Payments
Balance of payments
reports a countrys trade and financial transactions with the rest of the world tracks merchandise trade
tracks loans given to foreigners and loans received by citizens
Current account
Capital account
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Balance of Payments
Components of a Countrys Balance of Payments
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Balance of Payments
Current Account Balances: The Top and Bottom Five
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Copyright 2013 Pearson Education 4-38