The role of business in relation

to the economy
Objectives

Explain the role of business

in relation to the economy

List the impacts

Describe
of business to
Economics
the economy

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Main Idea

A business enterprise is a part

of a larger economic system

It therefore interacts with it

• Knowing how and why is crucial to
becoming successful

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Key Concept

A business firm co-exists

and interrelates with other
members in the economic
system.

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Key Terms

Econom is an area of the

production, distribution,
y or trade, and
consumption of goods
and services by different
agents in a given
geographical location.

Inflation is the increase in price

levels over time.

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Key Terms

Economic is a term used to

cycle describe how, in
general, the national
income of a country
increases or fall from
one year to the next

Expenditur the action of

e spending funds

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Key Terms

Income is the consumption and

savings opportunity
gained by an entity
within a specified
timeframe, which is
generally expressed in
monetary terms.
Unemploymen the state of being
t without a job

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Key Terms

Aggregate earnings
from a nations
current production
Nationa including
compensation of
l income employees, interest,
rental income, and
profits of business
after taxes

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Key Terms

The total value of the

goods and services
Gross produced by the people
domestic of a nation during a
year not including the
product value of income earned
in foreign countries

The total value of the

Gross goods and services
produced by the people
national of a nation during a
year
product
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Discussion
Starter Review the relationship of
business and the economy

“Is your business

economically ready?”

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The Relationship
Pays for the factors of productions

Provides the factors

of productions

ECONO BUSINES
MY S
Produce goods and
services

Pays for the goods and services

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Measuring activity in the national
economy
National income
gross national product
gross domestic product
 Measuring activity in the national
economy
The
expenditur C = the amount of
e approach
to
Economi consumption on goods
and services
calculating
economic c activity I = the amount spent on
investment in long-term
activity assets

= G = the amount of
government spending

C+I+G X = the amount of

exports of goods and
+ (X – M) services
M = the amount of
imports of goods and
services
Measuring activity in the national
economy
Economic Variable
18

16

14

12

10

0
EA C I G (X-M)

Economic Variable
Questions

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