BUS101: Introduction to Business

1.4: Components of Economic Policy

• 1.4.1: Budget Deficit (Expenses Exceed Revenues)

  • Leslie Lum's Introduction to Business: Readings and Workbook: "Module 1: The Context of Business"

    Please re-read the section titled "Fiscal Policy” on page 77 and review the graph on page 78 to learn about the definition of the budget deficit. In the year of an election, the candidates promise to reduce government spending. Usually this does not happen. The deficit in the United States is growing with the continuation of the wars in Iraq and Afghanistan. The yearly deficit continues to add to the national debt. Some U.S. citizens think that government spending helps the economy grow. Others think that government spending comes out of the hands of consumers and business owners, thereby slowing growth. Write a paragraph that expresses your thoughts on this argument.
    

• 1.4.2: Budget Surplus (Revenues Exceed Expenses)

  • Exploring Business: "Section 1.7: Government's Role in Managing the Economy"

    Read this entire section, particularly focusing on the selection under the heading of "The National Debt" to learn about budget surplus. It is quite unlikely that the United States will see a budget surplus in the near future. This situation is present when the tax revenues collected are greater than the expenses of the United States government. Complete Exercise 1 at the end of the section.
    

• 1.4.3: Government Regulation

  • Federal Reserve Bank of New York: "About the Fed - What We Do" Page

    Introduction to Business covers monetary policy and the Federal Reserve in Module 1. Review the graphic and text on page 79 to learn about the monetary policy. (Monetary policy manages the money supply under the control of the Federal Reserve Board..) Then, read this article to learn more about the Federal Reserve Bank of New York.

• 1.4.4: Economic Indicators

  • Leslie Lum's Introduction to Business: Readings and Workbook: "Module 1: The Context of Business" URL

    Please review pages 81 through 84 of Introduction to Business. For this activity, you should research three economic indicators: leading, coincidental, and lagging. Discuss what the data seems to be showing in the results of your research. Rank, or order, the economic indicators you consider most important. Write a 2 to 3 page essay that explains your findings, especially in terms of what the indicators say about the economy. In your conclusion, share where you believe the economy is going.
    

• 1.4.5: Consumer Price Index

  • U.S. Bureau of Labor Statistics: "CPI Inflation Calculator"

    Go to the CPI Inflation Calculator and perform two calculations:

    1. Compute what a pair of denim jeans cost the year you were born, if they cost $80 today.
       
    2. Compute what a car cost the year you were born, if it is selling for $23,000 today.
       

    Please feel free to explore the inflation rate of interest by performing additional calculations on this calculator.

• 1.4.6: Rate of Inflation

  • OpenStax College: "How the U.S. and Other Countries Experience Inflation" Page

    Read this article about the pattern of U.S. price and inflation rates from 1913 to the present. Pay particular attention to the charts that show the comparison between U.S. rates and those of other countries around the world. 
    

• 1.4.7: Business Cycles

  • Boundless Business: "The Business Cycle" Page

    Review pages 74-76 of Introduction to Business to learn about the characteristics of the business cycle and its relationship with the GDP. The combination of expansion and contractions is called the business cycle. 

    Then, read this article. Pay particular attention to the items listed under Key Points, Terms, and Examples. After reviewing this section, summarize what you consider the three most viable causes of business cycles.