essential inputs to the production process ; human resources, physical resources, knowledge resources, capital resources and infrastructure; they are crucial for investments made for production purposes.

composition of local demand (quality of demand), the size and growth of local demand (quantity of demand) and the internationalization of basic demand; they are crucial for market-seeking investments.

The broadest measure of economic activity, _____ represents the market value of final goods and services newly produced by domestically owned factors of production.

value of production that takes place within a nation’s borders, without regard to whether the production is carried out by domestic or foreign factors of production.

is computed by dividing GNI by a country’s population. Because nominal exchange rates (unadjusted market rates) do not always reflect international differences in prices

indicator of the number of units of a country’s currency required to buy the same amounts of goods and services in its domestic market.

Low- and middle-income nations World Bank

High-income nations

engaged in economic activity—the public sector (government), the private sector, or both.

allocation and control of resources engaged in economic activity.

resources are primarily owned and controlled by the private sector.

(the right to choose what to buy), the freedom of market entry and exit and the determination of prices according to the laws of supply and demand.

(often referred to as a centrally planned economy) is one in which all dimensions of economy activity, including pricing and production decisions, are determined by central government planning authorities.

economic system characterized by a mixture of market and command economies, including a combination of public and private ownership.

characterized by the state ownership of significant resources, but the allocation of those resources comes from the market price mechanism, and prices are determined by the laws of supply and demand.

3 types of Economy under the Classified Countries by Economic System

3 KEY MACROECONOMIC ISSUES AFFECTING BUSINESS STRATEGY

history is often used to forecast future economic trends, it is certainly not perfect. Further, there exists significant differences in growth rates throughout the world.

percentage increase in the change in prices from one period to the next, usually a year.

measures the cost of a fixed basket of goods and services and compares the price from one period to the next.

occurs because aggregate demand is growing faster than aggregate supply. Ultimately it affects interest rates, exchange rates, the cost of living and the general confidence in a country’s political and economic systems.

are rarely a problem.

high expenses than revenue

indicates that a government’s expenditures exceed its revenues

indicates that a country’s cash outflows (payments) exceed its inflows (receipts).

implies the liberalization of economic activity, the reallocation of resources to their most efficient use, macroeconomic stabilization, the privatization of state-owned assets, budgetary constraints and the development of an institution and legal framework to protect property and individual rights.