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30 PART 1 The Nature of Contemporary Business

In the United States, federal laws require organizations to practice nondiscrim-
inatory policies with regard to personnel recruitment, and this produces a diverse
workforce (for example, visit www.DiversityInc.com) in terms of race, sex, and
national origin. Texas A&M University, for example, is committed to Equal Employ-
ment Opportunity and Affirmative Action for minorities, women, veterans, and
individuals with disabilities. The university’s Affirmative Action Program can be
viewed at http://hr.tamu.edu/employment/action.html on its Human Resources
Department home page. The program’s objective is to recruit, select, promote, pay,
and take all personnel actions on the basis of professional abilities and qualifica-
tions. Companies that treated employees unfairly have paid a heavy price. For
example, Home Depot agreed to pay $104 million in 1997 to settle a class action suit
on behalf of 25,000 women who claimed they were denied promotions because
they were female. Coca-Cola and Texaco, now part of ChevronTexaco, each paid
well over $100 million to settle race discrimination cases in 2000. More recently, the
largest ever class action suit related to gender discrimination was filed against Wal-
Mart Corporation in July 2004 by all the female employees of that company.

reality By looking at the businesses around you, would you say that your
CH ECK hometown is culturally diverse?

Measuring Gross National Product, Gross National
Income, and Gross Domestic Product

LEARNING OBJECTIVE 9
Discuss why and how national output is measured and consider the rationale for
using output based on purchasing power parity (PPP) when comparing countries.
Another equally important factor that impacts consumer behavior and business
performance is income level, which when measured on a national scale is a coun-
gross national product (GNP) The value try’s gross national product (GNP).The GNP is the value of all final goods and serv-
of all final goods and services produced ices produced by a country’s factors of production (regardless of where these fac-
in an economy and measured at current
prices over a given time period, usually tors are located) and sold on the market at current prices over a given time period,
a year usually a year. The GNP is a summary measure of all goods, for example food, cloth-
ing, books, cars, and so on, and services, for example education, consulting, dry
cleaning, haircutting, airlines, and so on, that a country’s factors of production are
capable of producing. It is also a measure of a country’s living standard, including
its health status and educational attainment. The output of goods and services is
not possible without the help of factor inputs. The expenditures (income earned)
tied to the employment of each factor—land, labor, capital, and technology—are
gross national income (GNI) The called gross national income (GNI) and are equal to GNP.
expenditures that make up GNP and are Economists generally divide GNP among the four main uses for which a coun-
equal to the income that the factors of
production (land, labor, capital, and try’s output of goods and services is purchased. These include
technology) receive • Consumption (the expenditures of private domestic residents)
consumption The amount used by • Investment (the spending by private firms to build plant and equipment for
private domestic residents
future production)
investment The amount spent by private • Government expenditure (the amount spent by the government)
firms on new plant and equipment for
future production and profit • Net exports (the amount of goods and services sold overseas less the amount
government expenditure The amount of goods and services bought from abroad)
spent by the government
The term national income accounts is used to describe this fourfold classifica-
net exports Exports minus imports of tion because a country’s income, that is, its GNI, in fact equals its GNP. The reason
goods and services
for this equality is that every dollar used to purchase goods or services automati-
cally ends up as somebody’s income. A visit to your local hairstylist provides a sim-

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