2-3 Measures of Business Activity
Paige Munson, Hailey Ramatowski, and Zack Winkel
In order to invest for the future businesses must use capital spending. Capital projects include spending by business for land, equipment, buildings, and new products. Personal saving, stock investment, and bonds are the sources for capital projects. Examples of capital projects would include factories, construction equipment, and property.
The money that the general public deposits into the bank is often used for investment. These savers are returned with interest on their savings.
Many people buy shares or partial ownership of a corporation. This is called stock, or equity which ownership in a corporation. This is also called equity. Value of stock depends on the earnings of the corporation. The more people who want to buy these stocks the further the value of the stocks will go up.
Bond is also a way to invest. Bond is debt for an organization. If someone purchases a bond from a corporation or business. The business gets the money when you purchase the bond. Over time interest is gained on the purchase of the bond.
Often people need services from the government which will cost money. To pay for these the government has to borrow money to provide for the projects they are expected to. There could be a budget deficit which is when the government spends more than it takes in. The total debt of a government is called the national debt. Other times,a budget surplus may occur when the government spends less than it takes in. This could allow them to spend it on other projects. Lower taxes may also be a result
Most business will use borrowing through loans, bonds, and mortgages. If this is done correctly the business will benefit, but if it is made with bad choices it may cause the business to fail.
Consumer DebtConsumers often use credit cards, home mortgages and auto loans to fund what they buy. Borrowing can be convenient but the improper use of it can result in legal complications.
Future Economic Challenges
What determines the growth of the economy is how well it is able to produce output. There are still concerns in economies, such as lack of access to health care, crime, housing, traffic, and unemployment. To control these concerns for our economy it is important that there is economic growth to provide people with jobs, as well as what they want and need.