Understanding Business
02
Understanding
Economics and How it
Affects Business
Learning objectives
01
Explain basic
economics
Analyze the trend toward
04 mixed economies
Explain what
02 capitalism is and how
free markets work
Describe the economic
05 system of the United States
socialism
03 Compare
and communism
Contrast fiscal policy,
monetary policy, and
06 explain how each affects
the economy
Nhóm 7:Huỳnh Tấn Hưng – 22DH120956 _Hà Minh Kiên – 22DH121117
01 Explain basic economics
Economics: how society chooses to employ resources to produce goods, services, distribute them for consumption among
various competing groups and individuals.
Macroeconomics (Big): Concentrates on the operation of a
nation’s economy as a whole.
Microeconomics (Small): Concentrates on behavior of people
and organizations in markets for particular products or services
Recource Development: how to increase resources and create
conditions that will make better use of them.
Invisible Hand: when seft-directed gain leads to
social and economic benefits for the whole
community
World Population Growth
Explain what capitalism is and how
02 free markets work
Capitalism: All or most of the land, factories and stores are
owned by individuals, not the government, and operated for
profit (Ex: United States, England, Australia, Canada,...).
State Capitalism: a combination of freer markets and some
government control (Ex: China, Russia,…).
Under capitalism:
Free Market: decisions
(1).Private Property,
about what and how much to
(2).Business Ownership/ Profits, produce are made by the
(3).Freedom of Competition,
market.
(4).Freedom of Choice
03 Compare Socialism and Communism
Socialism: based on premise that some basic businesses,
like utilities, should be owned by the government in order to
more evenly distribute profits among the people.
Communism: Government makes almost all economic
decisions and owns almost all the major factors of production
Analyze
the
trend
toward
04
mixed economies
Mixed Economies: Some allocation of resources is made
by the market and some by the government
Neither free markets nor command economies have created
sound economic conditions so countries use a mix of the
two economic systems
Describe
the
economic
system
of
05 the U.S
Gross Domestic Product (GDP): Total value of final goods
and services produced in a country in a given year. As long
as a company is within a country’s border, their numbers go
into the country’s GDP (even if they are foreign-owned).
Gross output (GO): a measure of total sales volume at all
stages of production.
Business Cycles: Periodic rises and falls that occur in
economies over time. Four Phases of Long-Term Business
Cycles.
Business Cycles
01
03
Economic Boom
Depression – A
severe recession
02
Recession – Two or more
consecutive quarters of
decline in the GDP
04
Recovery – When the
economiy stabilizes and
starts to grow. This leads
to an Economic Boom
United Sates GDP Growth Rate
Contrast fiscal policy, monetary policy,
06
explain how each affects the economy
Fiscal Policy: federal government’s efforts to keep economy
stable. Increasing or decreasing taxes or government
spending. Tools of Fiscal Policy: Taxation, Government
Spending.
Monetary Policy: management of money supply and
interest rates by Federal Reserve Bank (the Fed). The Fed’s
most visible role is increasing and lowering interest rates.
-When the economy is booming, the Fed tends to increase
interest rates.
-When the economy is in a recession, the Fed tends to
decrease the interest rates
Thank you very much