Page 87 - Business Principles and Management

Unit 1

GDP. Such conditions affect not only U.S. citizens but also the economic climate
of foreign countries.
Because most nations engage in international trade and because of the impact
of global competition on nations, a major recession or depression in one country
usually impacts negatively on other countries. For example, during the first half
of the 1990s the United States experienced a period of recession and slow growth.
Japan, Germany, France, England, and other major nations also faced similar
circumstances shortly thereafter. Economic aspects of international trade will be
discussed in the next chapter.

CHECKPOINT
Describe the two problems that occur when the economic
growth rate jumps ahead or drops back too quickly.

3.4 Assessment

UNDERSTAND MANAGEMENT CONCEPTS
Circle the best answer for each of the following questions.
1. Which of the following are basic ways to increase the production
of goods and services in order to encourage economic growth?
a. Increase the number of people in the workforce.
b. Decrease the purchase of goods and services from foreign
countries.
c. Improve technology by inventing new and better machines.
d. All are ways to increase the production of goods and services.
2. A(n) ________ occurs when demand for the total goods and services
available is less than the supply.
a. inflation
b. recession
c. depression
d. business cycle

THINK CRITICALLY
Answer the following questions as completely as possible.
3. Explain the three problems that can occur within an economy
when the growth rate is too fast or too slow.
4. Explain how an economic system can control its
business cycles.

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