Government

1. Government economic
objectives and policies

2. How government control over the
economy affects business activity.
• Government economic objectives
• Healthy balance of payments
• Low unemployment
• Low inflation
• Economic growth

3. Balance of payments
• The difference between the value of export and
import of goods and services of a country over a
year.
• A positive balance of payments
Surplus
Exports>Imports

4. Balance of payments deficit
• A shortage of foreign exchange
• Borrow foreign currency
• Expensive interest rates
• Exchange rate

5. Inflation
• The price increase of goods and services over
time.
• Standard of living
• Low inflation

6. Low unemployment
• Contribute to the total output
• People can earn money and have a better
standard of living.
• Unemployment benefits versus infrastructure
• Income tax

7. Economic growth
• Gross Domestic Product (GDP)
• More business opportunities
• A good measure of economic activity.
• Activity 24.1 pg. 301

8. The business cycle
• The change in the economic activity as the
economy grows and shrinks over a number of
years.

9. Four stages
• Growth
• Boom
• Recession
• Slump

10. Growth
• A positive outlook for new businesses
• Grow and make profits
• A rise in GDP
• Falling unemployment
• Raised standards of living

11. Boom
• Business investments and profits are at there
highest levels
• Most sectors of the economy are performing at
their best
• High demand- prices rise
• Low unemployment rate- increased wage costs

12. Recession
• The economy shrinks in size
• Confidence falls- less investment in new and
existing businesses
• Decline in economic activity
• Falling demand-falling profits
• Unemployment rises

13. Unemployment rates in Egypt
• Case study
• Page 303
• Questions a-e

14. Slump
• The recession stage of the economy is at its
worst.
• Very low business confidence
• Very little investment
• Low production of goods and services.

15. Slump
• Low demand for goods and services
• High unemployment due to low business activity