Page 28 - Business Principles and Management

Chapter 1 • Characteristics of Business

FIGURE 1-2 Countries with the Largest GDPs

World $59,380,000,000,000
1 United States $12,370,000,000,000
2 European Union* $12,180,000,000,000
3 China $ 8,158,000,000,000
4 Japan $ 3,867,000,000,000
5 India $ 3,678,000,000,000
6 Germany $ 2,446,000,000,000
7 United Kingdom $ 1,867,000,000,000
8 France $ 1,816,000,000,000
9 Italy $ 1,645,000,000,000
*Combined GDP of all EU countries

Source: The World Fact Book, 2005

INDIVIDUAL WELL-BEING
A second measure of a nation’s wealth is the individual well-being of its citizens.
Although GDP figures are helpful in judging the overall growth of an economy,
such figures by themselves tell little about the economic worth of individuals.
However, the U.S. Department of Commerce gathers information that reveals
the financial well-being of U.S. citizens.
With increased income, an average family improves its level of living. Over
65 percent of all families live in homes they own. Many families now own items
that less than 50 years ago were considered luxuries by most households. For
example, almost all homes have refrigerators and more
than one television. Sixteen percent of homes have two
or more refrigerators and over one-third own a large- business note
screen television. The number of homes with access to
cable or satellite televisions has grown rapidly, with over
75 percent having that type of access. Over half of all
adults in the United States carry cell phones today and According to the Census Bureau, the average
some families give cell phones to their children before annual income of a person without a high
they are 10 years old. school diploma is about $25,000, and earnings
In addition to consumer products, Americans also invest frequently decline. Completing high school
money in self-improvement, including education, exercise raises that figure to $37,000, and obtaining
and fitness, and personal-care products. They participate in a college degree results in an average yearly
life-enrichment activities by attending the theater and con- income of over $65,000. If a person with each
certs and by traveling in this country and abroad. Despite level of education works for 30 years and
these large expenditures on material goods and services, earnings increase on average 3 percent each
Americans also put some of their money into savings. The year, calculate how much each will earn in
amount of savings varies from year to year, with total an- their lifetime. What is the percentage differ-
nual savings by Americans averaging over $100 billion. ence in the lifetime earnings between the
Even though the typical American has done well finan- lowest and highest paid individual?
cially compared to people in other countries, economic and
social problems still exist. For example, slow economic

15