Planning Guide Sheets
Section 5
Page 5-1
Week#
Days to
teach:
B
6.00
6.00
CHANNEL MANAGEMENT, SELLING, PROMOTION, MARKETINGINFORMATION MANAGEMENT, COMMUNICATION, AND ECONOMICS
Understand economics.
6.01 Analyze cost/profit relationships to guide business decision-making.
(EC:014), (EC:015) (SUPPLEMENTAL)
6.02 Analyze cost/profit relationships to guide business decision-making.
(EC:023)
6.03 Understand economic indicators to recognize economic trends and
conditions. (EC:083), (EC:017), (EC:082), (EC:084), (EC:018)
6.04 Determine global trade’s impact on business decision-making. (EC:016),
(EC:100), (EC:045) (SUPPLEMENTAL)
48%
11%
0%
3%
8%
0%
Section 5
Knowledge/
Skill
Statement
Planning Guide Sheets
Page 5-2
6.01(A) Analyze cost/profit relationships to
guide business decision-making. (EC:014),
(EC:015) (SUPPLEMENTAL)
Understands the economic principles and concepts fundamental to business
operations
Performance
Element
Analyze cost/profit relationships to guide business decision-making.
Performance
Indicator
Analyze the impact of specialization/division of labor on productivity (EC:014,
EC LAP 7) (SUPPLEMENTAL)
Level
Specialist
SCANS
Information 7; Systems 15; Basic Skills 1-2, 5-6; Thinking Skills 12
21st Century
Skills
Financial, Economic, Business and Entrepreneurial Literacy 2, 3; Critical
Thinking and Problem Solving Skills 1, 3, 4; Communication
Objectives
a. Define the following terms: specialization of labor, division of labor, depth
of jobs and scope of jobs.
b. Describe how resources are involved in specialization.
c. Identify forms of specialization of human resources.
d. Describe specialization by trade or profession.
e. Describe specialization by stage of production.
f. Describe specialization by task.
g. Explain the relationship between the depth and scope of a job.
h. Describe the advantages of specialization.
i. Explain the disadvantages of specialization.
j. Describe ways to overcome the disadvantages of specialization.
Performance
Activity
Explain that students are to analyze a job to determine the resources that are
involved in specialization, the form of human resource specialization, the
scope and depth of the job, the advantages/disadvantages in specializing the
work, and steps that could be taken to overcome disadvantages of
specialization. Tell them to write a report of their findings and to submit it to
you.
Resources
LAP
MBAResearch and Curriculum Center (2011). Divide and conquer
(Specialization of labor) [LAP: EC-007]. Columbus, OH: Author.
MBAResearch and Curriculum Center (2011). Divide and conquer
(Specialization of labor) Instructor copy [LAP: EC-007]. Columbus, OH:
Author.
Textbooks
Bovée, C. L. & Thill, J. V. (2008). Business communication today (9th ed.)
[pp. 323-324]. Upper Saddle River, NJ: Pearson Prentice Hall.
Burrow, J.L. (2006). Marketing (2nd ed.) [pp. 11-12, 297]. Mason, OH:
Thomson/South-Western.
Section 5
Planning Guide Sheets
Page 5-3
Clayton, G.E. (2005). Economics: Principles & Practices (pp. 12, 16, 467).
Columbus, OH: Glencoe/McGraw-Hill.
Dlabay, L.R., Burrow, J.L., & Kleindl, B. (2009). Intro to business (7th ed.) [p.
36-37, 325-326]. Mason, OH: South-Western Cengage Learning.
Farese, L. S., Kimbrell, G., & Woloszyk, C. A. (2009). Marketing essentials (p.
53, 115). Woodland Hills, CA: Glencoe/McGraw-Hill.
McConnell, C.R. & Brue, S.L. (2005). Economics: Principles, problems, and
policies (16th ed.) [pp. 63, 96-99, 404-405, 691-696]. New York: McGrawHill/Irwin.
Miller, R.L. (2005). Economics: Today and tomorrow (pp. 280, 475, 488).
Columbus, OH: Glencoe/McGraw-Hill.
O’Sullivan, A. & Sheffrin, S.M. (2003). Economics: Principles in action (pp.
28-29, 109, 328-329, 445-447). Upper Saddle River, NJ: Prentice Hall.
Sexton, R.L. (2003). Essentials of economics (pp. 34-35, 433-435). Mason,
OH: Thomson/South-Western.
Software/
Online
AmosWEB. (2000-2011). Division of labor. Retrieved May 24, 2011, from
http://www.amosweb.com/cgibin/awb_nav.pl?s=wpd&c=dsp&k=division+of+labor
AmosWEB. (2000-2011). Specialization. Retrieved May 24, 2011, from
http://www.amosweb.com/cgibin/awb_nav.pl?s=wpd&c=dsp&k=specialization
Answers.com. (2011). Business dictionary:Job depth. Retrieved May 24,
2011, from http://www.answers.com/topic/job-depth
Johnson, P.M. (1994-2005). Division of labor. Retrieved May 24, 2011, from
http://www.auburn.edu/~johnspm/gloss/division_of_labor
eNotes.com (2011). Division of labor. Retrieved May 24, 2011from
http://www.enotes.com/business-finance-encyclopedia/division-labor
Price, R.G. (2004). Division of labor, assembly line thought —the paradox of
democratic capitalism. Retrieved May 24, 2011, from
http://rationalrevolution.net/articles/division_of_labor.htm
MBAResearch and Curriculum Center (2011). Divide and conquer
(Specialization of labor) [LAP: EC-007—Presentation Software].
Columbus, OH: Author.
Niederhoffer, V. (2006, September 11). Specialization and the division of
labor. Retrieved May 24, 2011, from
http://www.dailyspeculations.com/vic/Division.html
Section 5
Key Points
Briefing: Specialization/Division of Labor
Page 5-4
Define specialization.
The process of making the best use of resources in the production of goods
and services
We specialize in the production of certain goods and services and exchange
them for other goods and services.
If you decided to produce all the goods and services you needed, rather than
producing some and trading for others, you would have less time to devote to
the production of any one item, resulting in production of fewer items than if
you’d specialized.
Explain how resources are involved in specialization.
Natural resources: We locate businesses where they can be the most
successful (e.g., ski lodge in the mountains close to the slopes, orange
groves in states with warm climates.
Capital goods: Specialized capital goods contribute to increased production
(e.g., use of robots on assembly lines).
Human resources: This occurs when people use their different skills and
abilities in jobs for which they are best suited. People should do what they do
best so that the most goods and services can be produced.
Discuss main forms of specialization of human resources.
Specialization by trade or profession: This is the type of work you perform to
earn a living (e.g., teachers, farmers, doctors, plumbers, artists, etc.).
Specialization by stage of production: This form occurs when more than one
state of production is needed to change a raw material into a finished product.
Specialization by task: This form occurs when jobs are so specialized by a
worker does only one small part of the total job (e.g., in a textile mill, one
worker cleans wool, another spins it into yarn, another dyes the yarn, and
another weaves it into a woolen fabric). This type of specialization is also
known as division of labor.
Explain the scope of jobs.
Defined as the number of different operations you do on the job and the
frequency with which you do them
The lower your task level, the lower the scope of the job
Example:
Low scope: The job is to put doors on cars on an assembly line.
Higher scope: The job is to put doors on cars, put seats in cars, and
check the steering mechanism.
Describe the depth of jobs.
Defined as the amount of control you have over the tasks that you do
Example:
Low depth: There are strict guidelines you must follow, and you make
very few decisions.
High depth: You follow general guidelines and set your own pace.
Section 5
Briefing: Specialization/Division of Labor
Page 5-5
Discuss how the scope and depth of jobs can change with a specific task.
Example: How a manager’s scope and depth can change during one day.

The manager chooses advertising design and layout scheme for an upcoming
promotion (high depth, high scope)

The manager makes out the weekly work schedule for employees (high
depth, low scope)

The manager signs employee time cards (low depth, low scope)

The manager evaluates employee performance according to the owner’s
standards (low depth, high scope)

The scope and depth of certain jobs within a company can change more than
that of another employee in the same company.
Identify advantages to specialization.

Simplified worker training

Increased employee interest and satisfaction

Increased production rates

Increased level of skill

Increased quality of work

Ease of transferring to a similar job
Identify disadvantages associated with specialization.


Increased interdependency

Increased boredom on the job

Decreased pride in work

Decreased morale and enthusiasm for the job

Increased chance of obsolescence because of technological advances
High degree of specialization may cause difficulty transferring or obtaining
another job
Explain ways that businesses combat the disadvantages associated with
specialization.

Job enlargement: Management may combine job tasks to restore wholeness
(e.g., instead of limiting salespeople strictly to selling merchandise, their jobs
may be enlarged to help with displays, restocking merchandise, etc.).

Job rotation: Managers may also rotate employees periodically so that they
learn new job tasks and see how their old tasks relate to the new tasks.

Job enrichment: Managers add interest to a task to increase a job’s depth,
allowing workers to make more decision, set their own pace, and supervise
others.
●
Job satisfaction: Managers may ask for and use employee suggestions; allow
flexible or alternative work schedules; praise work well done; and provide cash
incentives, contests, and bonuses.
Section 5
Knowledge/
Skill
Statement
Planning Guide Sheets
Page 5-6
6.01 (B) Analyze cost/profit relationships to
guide business decision-making. (EC:014),
(EC:015) (SUPPLEMENTAL)
Understands the economic principles and concepts fundamental to business
operations
Performance
Element
Analyze cost/profit relationships to guide business decision-making.
Performance
Indicator
Explain the concept of organized labor and business (EC:015, EC LAP 5)
(SUPPLEMENTAL)
Level
Specialist
SCANS
Information 7; Interpersonal 9,13; Systems 15; Basic Skills 1-2, 5-6; Thinking
Skills 8,12
21st Century
Skills
Financial, Economic, Business and Entrepreneurial Literacy 2; Critical
Thinking and Problem Solving Skills 1, 3; Communication
Objectives
a. Define the following terms: labor union, local, national, federation,
collective bargaining, strikes, picketing, boycotts, featherbedding,
lockouts, injunctions and strikebreakers.
b. Identify reasons that labor unions form.
c. Identify types of labor issues.
d. Classify types of unions.
e. Describe levels of union organization.
f. Describe types of union organization.
g. Describe the collective bargaining process.
h. Explain types of union negotiation strategies.
i. Describe types of management negotiation strategies.
j. Explain the effects of unionism on workers.
k. Describe the effects of unionism on businesses.
Performance
Activity
Have students search the Internet for information about unions—their
benefits, requirements, pressure strategies, etc. Tell them to print a copy of
their findings. Ask them to evaluate the information obtained to determine
whether they would want to be a union member. Have them write a paper
persuading others to support their point of view. Ask them to attach the
printed Internet information to their papers, and submit them to you.
Resources
LAP
MBA Research and Curriculum Center (2011). Get united [LAP: EC-005].
Columbus, OH: Author.
MBA Research and Curriculum Center (2011). Get united: Instructor copy
[LAP: EC-005]. Columbus, OH: Author.
Textbooks
Bovée, C. L., & Thill, J.V. (2008). Business in action (4th ed.) [pp. 369-373].
Upper Saddle River, NJ: Pearson Prentice Hall.
Clayton, G.E. (2005). Economics: Principles & Practices (pp. 76-77, 194-198,
Section 5
Planning Guide Sheets
Page 5-7
200-203, 211-213). Columbus, OH: Glencoe/McGraw-Hill.
Dessler, G., & Varkkey, B. (2009). Human resource management (11th ed.)
[pp. 603-620]. New Dehli, India: Dorling Kindersley.
Dlabay, L.R., Burrow, J.L., & Kleindl, B. (2009). Intro to business (7th ed.) [p.
191]. Mason, OH: South-Western Cengage Learning.
McConnell, C.R. & Brue, S.L. (2005). Economics: Principles, problems, and
policies (16th ed.) [pp. 528-532, 650-657]. New York: McGraw-Hill/Irwin.
Miller, R.L. (2005). Economics: Today and tomorrow (pp. 321-333).
Columbus, OH: Glencoe/McGraw-Hill.
O’Sullivan, A. & Sheffrin, S.M. (2003). Economics: Principles in action (pp.
225-234). Upper Saddle River, NJ: Prentice Hall.
Rue, L.W., & Byars, L.L. (2006). Business management: Real-world
applications & connections (pp. 126-129). New York: Glencoe/McGrawHill.
Sexton, R.L. (2003). Essentials of economics (pp. 223-225). Mason, OH:
Thomson/South-Western.
Software/
Online
Cornell University Law School. (n.d.). Collective bargaining and labor
arbitration: An overview. Retrieved May 24, 2011, from
http://topics.law.cornell.edu/wex/collective_bargaining
Encyclopedia of Small Business. (2011). Labor unions. Retrieved May 24,
2011, from http://www.referenceforbusiness.com/small/Inc-Mail/LaborUnions.html
MBA Research and Curriculum Center (2011). Get United [LAP: EC-005—
Presentation Software]. Columbus, OH: Author.
Reynolds, M.O. (2008). Labor unions. Retrieved May 24, 2011, from
http://www.econlib.org/Library/Enc/LaborUnions.html
Siasoco, R.V. (2007). Hard labor: How unions fought to honor the American
worker. Retrieved May 24, 2011from
http://www.factmonster.com/spot/labor1.html
Smith, S.E. (2003-2011). What is a picket? Retrieved May 24, 2011, from
http://www.wisegeek.com/what-is-a-picket.htm
Section 5
Week# _____
Days to
teach:_____
Planning Guide Sheets
Page 5-8
6.02 Analyze cost/profit relationships to
guide business decision-making. (EC:023)
Knowledge/
Skill
Statement
Understands the economic principles and concepts fundamental to business
operations
Performance
Element
Analyze cost/profit relationships to guide business decision-making.
Performance
Indicator
Explain the impact of the law of diminishing returns (EC:023)
Level
Specialist
SCANS
Information 5,7; Systems 15; Basic Skills 1-2, 4-6; Thinking Skills 9,12
21st Century
Skills
Financial, Economic, Business and Entrepreneurial Literacy 2; Critical
Thinking and Problem Solving Skills 1, 3; Communication
Objectives
a. Define the following terms: stages of production, theory of production,
production function, increasing returns, diminishing returns, law of
diminishing returns, law of variable proportions, marginal product
negative returns, marginal cost, total revenue, and marginal revenue.
b. Explain the stages of production.
c. Describe the impact of the law of diminishing returns on production
decisions.
d. Explain how total revenue and marginal revenue are used to determine
the amount of output that will generate the most profit.
Performance
Activity
Obtain scissors and tape for each group of three students, using half the
class. Make 25 copies of the box handout provided on page 5-169 for each
group. (Cut on solid lines; fold on dotted lines.) Explain how to construct a box
using the pattern on the handout. Divide the class into groups of three
students each. Ask each group to determine the number of boxes that can be
made by its group in one minute. Continue the construction process, adding
one worker at a time to each group and checking productivity at one-minute
intervals. Ask the groups to determine the point at which the additional person
does not increase productivity. Discuss how the principle of diminishing
returns relates to productivity.
Or, have students complete the project entitled Have You Had Enough?
provided on p. 6-9.
Resources
Textbooks
Abel, A. B., & Bernanke, B. S. (2005). Macroeconomics (5th ed.) [pp. 63-77].
New York: Pearson Addison Wesley.
Bovée, C. L. & Thill, J. V. (2008). Business communication today (9th ed.)
[pp. 90-93]. Upper Saddle River, NJ: Pearson Prentice Hall.
Clark, B., Sobel, J., & Basteri, C.G. (2010). Marketing dynamics: Teacher’s
edition (2nd ed.) [pp. 289-294]. Tinley Park, IL: Goodheart-Willcox
Section 5
Planning Guide Sheets
Page 5-9
Company, Inc.
Clayton, G.E. (2005). Economics: Principles & Practices (pp. 124-125, 130).
Columbus, OH: Glencoe/McGraw-Hill.
Dlabay, L.R., Burrow, J.L., & Kleindl, B. (2009). Intro to business (7th ed.) [pp.
318-326]. Mason, OH: South-Western Cengage Learning.
Farese, L. S., Kimbrell, G., & Woloszyk, C. A. (2009). Marketing essentials
(pp. 114-115). Woodland Hills, CA: Glencoe/McGraw-Hill.
Ivancevich, J. M., & Duening, T. N. (2007). Business principles, guidelines,
and practices (2nd ed.) [pp. 230-231]. Mason, OH: Thomson.
McConnell, C.R. & Brue, S.L. (2005). Economics: Principles, problems, and
policies (16th ed.) [pp. 395-402, 415-426]. New York: McGraw-Hill/Irwin.
Miller, R.L. (2005). Economics: Today and tomorrow (p. 192). Columbus, OH:
Glencoe/McGraw-Hill.
O’Sullivan, A. & Sheffrin, S.M. (2003). Economics: Principles in action (pp.
108-114). Upper Saddle River, NJ: Prentice Hall.
Rue, L.W., & Byars, L.L. (2006). Business management: Real-world
applications & connections (pp. 264, 266-267, 310, 452). New York:
Glencoe/McGraw-Hill.
Sexton, R.L. (2003). Essentials of economics (pp. 145-151, 167-169, 190193). Mason, OH: Thomson/South-Western.
Software/
Online
AmosWEB. (2000-2011). Law of diminishing marginal returns. Retrieved May
24, 2011, from http://www.amosweb.com/cgibin/awb_nav.pl?s=wpd&c=dsp&k=law+of+diminishing+marginal+returns
AmosWEB. (2000-2011). Marginal cost. Retrieved May 24, 2011, from
http://www.amosweb.com/cgibin/awb_nav.pl?s=wpd&c=dsp&k=marginal+cost
AmosWEB. (2000-2011). Marginal product. Retrieved May 24, 2011, from
http://www.amosweb.com/cgibin/awb_nav.pl?s=wpd&c=dsp&k=marginal+product
AmosWEB. (2000-2011). Marginal revenue. Retrieved May 24, 2011, from
http://www.amosweb.com/cgibin/awb_nav.pl?s=wpd&c=dsp&k=marginal+revenue
AmosWEB. (2000-2011). Production function. Retrieved May 24, 2011, from
http://www.amosweb.com/cgibin/awb_nav.pl?s=wpd&c=dsp&k=production+function
AmosWEB. (2000-2011). Total revenue. Retrieved May 24, 2011, from
http://www.amosweb.com/cgibin/awb_nav.pl?s=wpd&c=dsp&k=total+revenue
Biz/ed. (1996-2011). The nature of production—Stages of production.
Retrieved May 24, 2011, from
http://www.bized.co.uk/educators/level2/busactivity/activity/production12.
htm
Johnson, P.M. (1994-2005). Diminishing returns, law of. Retrieved May 24,
2011, from
http://www.auburn.edu/~johnspm/gloss/diminishing_returns_law_of
tutor2u. (n.d.). Profit and sales revenue maximisation using total cost and
total revenue curves. Retrieved May 24, 2011, from
http://tutor2u.net/economics/content/topics/buseconomics/objectives_prof
itmax.htm
tutor2u. (n.d.). Stages of production. Retrieved May 24, 2011, from
http://tutor2u.net/business/gcse/production_stages.htm
Section 5
Box Pattern Handout
Page 5-10
Section 5
Planning Guide Sheets
Page 5-11
Week#
____________
Day(s) to teach:
6.03(A)Understand economic indicators to recognize
economic trends and conditions. (EC:083),
Knowledge/
Skill
Statement
Understands the economic principles and concepts fundamental to business
operations
Performance
Element
Understand economic indicators to recognize economic trends and
conditions.
Performance
Indicator
Describe the economic impact of inflation on business (EC:083)
Level
Specialist
SCANS
Information 5,7-8; Systems 15; Technology 19; Basic Skills 1-2,4-6; Thinking
Skills 8,12
21st Century
Skills
Financial, Economic, Business and Entrepreneurial Literacy 2; Critical
Thinking and Problem Solving Skills 1, 3; Communication
Objectives
a.
b.
c.
d.
e.
f.
g.
h.
i.
j.
k.
l.
Performance
Activity
Define the following terms: inflation, inflation rate, deflation, Consumer
Price Index, standard of living, targeted inflation rate, and price stability.
Describe causes of inflation.
Explain how inflation impacts the economy.
Describe the relationship between price stability and inflation.
Explain problems associated with deflation.
Discuss reasons why the inflation rate should be above zero.
Explain how businesses can use the Consumer Price Index.
Discuss the purpose of the Consumer Price Index (CPI).
Describe how the Consumer Price Index is determined.
Identify the major kinds of consumer spending that make up the
Consumer Price Index.
Explain how the Consumer Price Index is used to find the rate of
inflation.
Describe limitations on the use of the Consumer Price Index.
Have students interpret the Consumer Price Index over a 10-year period and
to draw conclusions about the prices of food, clothing, and medical care. Tell
them to collaborate with a partner to discuss their findings and conclusions.
Resources
Textbooks
Abel, A. B., & Bernanke, B. S. (2005). Macroeconomics (5th ed.) [pp. 6-8, 4950, 400-408, 455-462]. New York: Pearson Addison Wesley.
Boone, G., & Kurtz, D.L. (2009). Contemporary marketing 2009 (pp. 87-88).
Mason, OH: South-Western Cengage Learning.
Bovée, C. L., & Thill, J.V. (2008). Business in action (4th ed.) [pp.19-20].
Upper Saddle River, NJ: Pearson Prentice Hall.
Burrow, J.L. (2006). Marketing (2nd ed.) [pp. 494-495]. Mason, OH:
Section 5
Planning Guide Sheets
Page 5-12
Thomson/South-Western.
Clark, B., Sobel, J., & Basteri, C.G. (2010). Marketing dynamics: Teacher’s
edition (2nd ed.) [pp. 117-120]. Tinley Park, IL: Goodheart-Willcox
Company, Inc.
Clayton, G.E. (2005). Economics: Principles & Practices (pp. 389-392).
Columbus, OH: Glencoe/McGraw-Hill.
Clayton, G.E. & Giesbrecht, M.G. (2004). A guide to everyday economic
statistics (6th ed.) [pp. 6, 105-109]. New York: McGraw-Hill/Irwin.
Dlabay, L.R., Burrow, J.L., & Kleindl, B. (2009). Intro to business (7th ed.) [pp.
40-41, 489]. Mason, OH: South-Western Cengage Learning.
Farese, L. S., Kimbrell, G., & Woloszyk, C. A. (2009). Marketing essentials (p.
62, 64). Woodland Hills, CA: Glencoe/McGraw-Hill.
McConnell, C.R. & Brue, S.L. (2005). Economics: Principles, problems, and
policies (16th ed.) [pp. 141-148]. New York: McGraw-Hill/Irwin.
Miller, R.L. (2005). Economics: Today and tomorrow (pp. 454-455).
Columbus, OH: Glencoe/McGraw-Hill.
Miller, R.L., & Stafford, A.D. (2010). Economic education for consumers (4th
ed.) [p. 581]. Mason, OH: South-Western Cengage Learning.
O’Sullivan, A. & Sheffrin, S.M. (2003). Economics: Principles in action (pp.
338-343). Upper Saddle River, NJ: Prentice Hall.
Sexton, R.L. (2003). Essentials of economics (pp. 259-263). Mason, OH:
Thomson/South-Western.
Software/
Online
AmosWEB. (2000-2011). Consumer Price Index. Retrieved May 24, 2011,
from http://www.amosweb.com/cgibin/awb_nav.pl?s=wpd&c=dsp&k=Consumer+Price+Index
AmosWEB. (2000-2011). Deflation. Retrieved May 24, 2011, from
http://www.amosweb.com/cgi-bin/awb_nav.pl?s=wpd&c=dsp&k=deflation
AmosWEB. (2000-2011). Inflation. Retrieved May 24, 2011, from
http://www.amosweb.com/cgi-bin/awb_nav.pl?s=wpd&c=dsp&k=inflation
AmosWEB. (2000-2011). Inflation rate. Retrieved May 24, 2011, from
http://www.amosweb.com/cgibin/awb_nav.pl?s=wpd&c=dsp&k=inflation+rate
AmosWEB. (2000-2011). Price stability. Retrieved May 24, 2011, from
http://www.amosweb.com/cgibin/awb_nav.pl?s=wpd&c=dsp&k=price+stability
Cross-Curricular Connections. (2011). The CPI—A crystal ball? Retrieved
May 24, 2011, from
http://www.econedlink.org/lessons/index.cfm?lesson=EM255&page=teac
her
InflationData.com. (2003-2011). Consumer price index. Retrieved May 24,
2011, from
http://inflationdata.com/Inflation/Consumer_Price_Index/CPI.asp
Land and Freedom Economic Lessons. (n.d.). The business cycle: 2.
Inflation. Retrieved May 24, 2011, from
http://www.landandfreedom.org/econ/econ11f.htm
McMahon, T. (2008, July 16). Inflation cause and effect. May 24, 2011, from
http://www.inflationdata.com/inflation/Articles/Inflation_cause_and_effect.
asp
Niederjohn, S. (2009, January 6). Was Babe Ruth underpaid ? Retrieved May
24, 2011, from
http://www.econedlink.org/lessons/index.php?lesson=604&page=teacher
Section 5
Week#_____
Day(s) to
teach:______
Planning Guide Sheets
Page 5-13
6.03(B) Understand economic indicators to
recognize economic trends and conditions.
(EC:017),
Knowledge/
Skill
Statement
Performance
Element
Understands the economic principles and concepts fundamental to business
operations
Performance
Indicator
Explain the concept of Gross Domestic Product (GDP) (EC:017, EC LAP 1)
Level
Specialist
SCANS
Information 5,7-8; Systems 15; Technology 19; Basic Skills 1-2,4-6; Thinking
Skills 8,12
21st Century
Skills
Financial, Economic, Business and Entrepreneurial Literacy 2; Critical
Thinking and Problem Solving Skills 1, 3; Communication
Objectives
a. Define the following terms: gross domestic product (GDP), personal
consumption expenditures, gross private domestic investment,
government purchases of goods and services, net exports of goods and
services, trade deficit, trade surplus, uncounted production, underground
economy, and double counting.
b. Identify the categories of goods and services that make up GDP.
c. Describe problems encountered in calculating GDP.
d. Explain the importance of a country's GDP.
e. Describe ways to increase GDP.
f. Describe how the government responds to changes in GDP.
g. Describe ways that businesses respond to changes in GDP.
Performance
Activity
Ask students to assume that the United States is in a recessionary period and
that consumers are worried about losing their jobs and experiencing a
reduction in wages. Tell them to explain in a brief paragraph how this fear
among consumers will be reflected in GDP. Have students submit the
paragraph to you.
Understand economic indicators to recognize economic trends and
conditions.
Resources
LAP
MBA Research and Curriculum Center (2011). Measure up [LAP: EC-001].
Columbus, OH: Author.
MBA Research and Curriculum Center (2011). Measure up: Instructor copy
[LAP: EC-001]. Columbus, OH: Author.
Textbooks
Abel, A. B., & Bernanke, B. S. (2005). Macroeconomics (5th ed.) [pp. 28-32].
New York: Pearson Addison Wesley.
Bovée, C. L., & Thill, J.V. (2008). Business in action (4th ed.) [p. 20]. Upper
Saddle River, NJ: Pearson Prentice Hall.
Burrow, J.L. (2006). Marketing (2nd ed.) [pp. 482, 494]. Mason, OH:
Thomson/South-Western.
Clark, B., Sobel, J., & Basteri, C.G. (2010). Marketing dynamics: Teacher’s
Section 5
Planning Guide Sheets
Page 5-14
edition (2nd ed.) [pp. 114-116]. Tinley Park, IL: Goodheart-Willcox
Company, Inc.
Clayton, G.E. (2005). Economics: Principles & Practices (pp. 341-344, 350368). Columbus, OH: Glencoe/McGraw-Hill.
Clayton, G.E. & Giesbrecht, M.G. (2004). A guide to everyday economic
statistics (6th ed.) [pp. 15-27]. New York: McGraw-Hill/Irwin.
Dlabay, L.R., Burrow, J.L., & Kleindl, B. (2009). Intro to business (7th ed.) [pp.
34-35, 38, 40]. Mason, OH: South-Western Cengage Learning.
Farese, L. S., Kimbrell, G., & Woloszyk, C. A. (2009). Marketing essentials
(pp. 61-63). Woodland Hills, CA: Glencoe/McGraw-Hill.
McConnell, C.R. & Brue, S.L. (2005). Economics: Principles, problems, and
policies (16th ed.) [pp. 112-126]. New York: McGraw-Hill/Irwin.
Miller, R.L. (2005). Economics: Today and tomorrow (pp. 343-348).
Columbus, OH: Glencoe/McGraw-Hill.
Miller, R.L., & Stafford, A.D. (2010). Economic education for consumers (4th
ed.) [pp. 580-581]. Mason, OH: South-Western Cengage Learning.
O’Sullivan, A. & Sheffrin, S.M. (2003). Economics: Principles in action (pp.
57-58, 301-324). Upper Saddle River, NJ: Prentice Hall.
Sexton, R.L. (2003). Essentials of economics (pp. 272-292). Mason, OH:
Thomson/South-Western.
Software/
Online
AmosWEB. (2000-2011). Double counting. Retrieved May 24, 2011, from
http://www.amosweb.com/cgibin/awb_nav.pl?s=wpd&c=dsp&k=double+counting
AmosWEB. (2000-2011). Government purchases. Retrieved May 24, 2011,
from http://www.amosweb.com/cgibin/awb_nav.pl?s=wpd&c=dsp&k=government+purchases
AmosWEB. (2000-2011). Gross private domestic investment. Retrieved May
24, 2011, from http://www.amosweb.com/cgibin/awb_nav.pl?s=wpd&c=dsp&k=gross+private+domestic+investment
AmosWEB. (2000-2011). Gross Domestic Product. Retrieved May 24, 2011,
from http://www.amosweb.com/cgibin/awb_nav.pl?s=wpd&c=dsp&k=gross+domestic+product
AmosWEB. (2000-2011). Net exports of goods and services. Retrieved May
24, 2011, from http://www.amosweb.com/cgibin/awb_nav.pl?s=wpd&c=dsp&k=net+exports+of+goods+and+services
AmosWEB. (2000-2011). Personal consumption expenditures. Retrieved May
24, 2011, from http://www.amosweb.com/cgibin/awb_nav.pl?s=wpd&c=dsp&k=personal+consumption+expenditures
AmosWEB. (2000-2011). Underground economy. Retrieved May 24, 2011,
from http://www.amosweb.com/cgibin/awb_nav.pl?s=wpd&c=dsp&k=underground+economy
MBA Research and Curriculum Center (2011). Measure up [LAP: EC-001—
Presentation Software]. Columbus, OH: Author.
Investopedia. (2011). What is GDP and why is it so important? Retrieved May
24, 2011, from http://www.investopedia.com/ask/answers/199.asp
QuickMBA. (1999-2010). Gross Domestic Product (GDP). Retrieved May 24,
2011, from http://www.quickmba.com/econ/macro/gdp/
Section 5
Week#______
Day(s) to
teach:______
Planning Guide Sheets
Page 5-15
6.03 (C) Understand economic indicators to
recognize economic trends and conditions.
(EC:082),
Knowledge/
Skill
Statement
Performance
Element
Understands the economic principles and concepts fundamental to business
operations
Performance
Indicator
Discuss the impact of a nation’s unemployment rates (EC:082) (SP)
Level
Specialist
SCANS
Information 5,7; Systems 15; Basic Skills 1-2, 5-6; Thinking Skills 11-12
21st Century
Skills
Financial, Economic, Business and Entrepreneurial Literacy 2; Critical
Thinking and Problem Solving Skills 1, 3; Communication
Objectives
a. Define the following terms: unemployment rate, frictional unemployment,
structural unemployment, cyclical unemployment, seasonal
unemployment, technological unemployment, and full employment.
b. Discuss individual costs of unemployment.
c. Describe economic benefits of unemployment.
d. Explain theories of the causes of unemployment.
e. Explain why the unemployment rate understates employment conditions.
f. Describe the costs of unemployment for a nation.
Performance
Activity
Tell students to determine the state’s current unemployment rate and to
compare this with the national unemployment rate. Ask them to identify ways
that the state’s fiscal policy might account for the differences identified.
Discuss student findings and conclusions as a large group.
Understand economic indicators to recognize economic trends and
conditions.
Resources
Textbooks
Abel, A. B., & Bernanke, B. S. (2005). Macroeconomics (5th ed.) [pp. 94-101].
New York: Pearson Addison Wesley.
Clark, B., Sobel, J., & Basteri, C.G. (2010). Marketing dynamics: Teacher’s
edition (2nd ed.) [pp. 121-122]. Tinley Park, IL: Goodheart-Willcox
Company, Inc.
Clayton, G.E. (2005). Economics: Principles & Practices (pp. 382-387).
Columbus, OH: Glencoe/McGraw-Hill.
Clayton, G.E. & Giesbrecht, M.G. (2004). A guide to everyday economic
statistics (6th ed.) [pp. 70-75]. New York: McGraw-Hill/Irwin.
Dlabay, L.R., Burrow, J.L., & Kleindl, B. (2009). Intro to business (7th ed.) [p.
36]. Mason, OH: South-Western Cengage Learning.
Farese, L. S., Kimbrell, G., & Woloszyk, C. A. (2009). Marketing essentials (p.
64). Woodland Hills, CA: Glencoe/McGraw-Hill.
McConnell, C.R. & Brue, S.L. (2005). Economics: Principles, problems, and
policies (16th ed.) [pp. 135-140]. New York: McGraw-Hill/Irwin.
Miller, R.L. (2005). Economics: Today and tomorrow (pp. 451-453).
Columbus, OH: Glencoe/McGraw-Hill.
Section 5
Planning Guide Sheets
Page 5-16
Miller, R.L., & Stafford, A.D. (2010). Economic education for consumers (4th
ed.) [pp. 581-582]. Mason, OH: South-Western Cengage Learning.
O’Sullivan, A. & Sheffrin, S.M. (2003). Economics: Principles in action (pp.
212-213, 331-336, 351). Upper Saddle River, NJ: Prentice Hall.
Sexton, R.L. (2003). Essentials of economics (pp. 246-258). Mason, OH:
Thomson/South-Western.
Software/
Online
AmosWEB. (2000-2011). Cyclical unemployment. Retrieved May 24, 2011,
from http://www.amosweb.com/cgibin/awb_nav.pl?s=wpd&c=dsp&k=cyclical+unemployment
AmosWEB. (2000-2011). Frictional unemployment. Retrieved May 24, 2011,
from http://www.amosweeb.com/cgibin/awb_nav.pl?s=wpd&c=dsp&k=frictional+unemployment
AmosWEB. (2000-2011). Full employment. Retrieved May 24, 2011, from
http://www.amosweb.com/cgibin/awb_nav.pl?s=wpd&c=dsp&k=full+employment
AmosWEB. (2000-2011). Seasonal unemployment. Retrieved May 24, 2011,
from http://www.amosweb.com/cgibin/awb_nav.pl?s=wpd&c=dsp&k=seasonal+unemployment
AmosWEB. (2000-2011). Structural unemployment. Retrieved May 24, 2011,
from http://www.amosweb.com/cgibin/awb_nav.pl?s=wpd&c=dsp&k=structural+unemployment
AmosWEB. (2000-2011). Unemployment rate. Retrieved May 24, 2011, from
http://www.amosweb.com/cgibin/awb_nav.pl?s=wpd&c=dsp&k=unemployment+rate
Chapter 6: Unemployment. (n.d.). Retrieved May 24, 2011, from
http://www.oswego.edu/~edunne/200ch6.html
Search.com. (n.d.). Unemployment. Retrieved May 24, 2011, from
http://www.search.com/reference/Unemployment
James, J. (2008, September 23 The impact of unemployment on our society.
Retrieved May 24, 2011, from http://www.helium.com/items/23934-theimpact-of-unemployment-on-our-society
Section 5
Week#______
Day(s) to
teach:______
Planning Guide Sheets
Page 5-17
6.03 (D) Understand economic indicators to
recognize economic trends and conditions),
(EC:084),
Knowledge/
Skill
Statement
Understands the economic principles and concepts fundamental to business
operations
Performance
Element
Understand economic indicators to recognize economic trends and
conditions.
Performance
Indicator
Explain the economic impact of interest-rate fluctuations (EC:084)
Level
Specialist
SCANS
Information 7; Systems 15; Basic Skills 1-2, 5-6; Thinking Skills 12
21st Century
Skills
Financial, Economic, Business and Entrepreneurial Literacy 1, 2; Critical
Thinking and Problem Solving Skills 1, 3; Communication
Objectives
a.
b.
c.
d.
e.
f.
g.
h.
Performance
Activity
Define the following terms: interest rate, nominal interest rate, real
interest rate, interest-rate fluctuation, default risk, liquidity risk, maturity
risk.
Discuss causes of interest-rate fluctuations.
Explain the impact of interest rate fluctuations on an economy.
Describe the relationship between interest rates and the demand for
money.
Describe the relationship between inflation and interest rates.
Discuss factors that create differences in the amount of interest charged
on credit transactions (e.g., levels and kinds of risk, borrowers’ and
lenders’ rights, and tax considerations).
Describe kinds of risk associated with variances in interest rates (i.e.,
default, liquidity, and maturity).
Explain how fiscal policies can affect interest rates.
Ask students to locate and read articles about trends in interest rates. Tell
them to summarize the articles, identifying the nature of the trends and
reasons that they are occurring. Have them determine the impact that these
trends are having on local businesses. Have students discuss their findings
with the class.
Resources
Textbooks
Abel, A. B., & Bernanke, B. S. (2005). Macroeconomics (5th ed.) [pp. 51-54,
268-269, 559-560]. New York: Pearson Addison Wesley.
Bovée, C. L. & Thill, J. V. (2008). Business communication today (9th ed.)
[pp. 16-17, 177-178]. Upper Saddle River, NJ: Pearson Prentice Hall.
Clayton, G.E. (2005). Economics: Principles & Practices (pp. 428-431, 453454). Columbus, OH: Glencoe/McGraw-Hill.
Clayton, G.E. & Giesbrecht, M.G. (2004). A guide to everyday economic
statistics (6th ed.) [pp. 115-124]. New York: McGraw-Hill/Irwin.
Dlabay, L.R., Burrow, J.L., & Kleindl, B. (2009). Intro to business (7th ed.) [pp.
Section 5
Planning Guide Sheets
Page 5-18
41-42, 59, 489]. Mason, OH: South-Western Cengage Learning.
Farese, L. S., Kimbrell, G., & Woloszyk, C. A. (2009). Marketing essentials (p.
67). Woodland Hills, CA: Glencoe/McGraw-Hill.
McConnell, C.R. & Brue, S.L. (2005). Economics: Principles, problems, and
policies (16th ed.) [pp. 545-550]. New York: McGraw-Hill/Irwin.
Miller, R.L., & Stafford, A.D. (2010). Economic education for consumers (4th
ed.) [p. 268]. Mason, OH: South-Western Cengage Learning.
O’Sullivan, A. & Sheffrin, S.M. (2003). Economics: Principles in action (pp.
312-313, 343, 430-431). Upper Saddle River, NJ: Prentice Hall.
Sexton, R.L. (2003). Essentials of economics (pp. 262-263, 315-316, 405412). Mason, OH: Thomson/South-Western.
Software/
Online
Berger, A.N., Espinosa-Vega, M.A., Frame, W.S., & Miller, N.H. (n.d.). Debt
maturity, risk, and asymmetric information. Retrieved May 24, 2011, from
http://www.federalreserve.gov/pubs/feds/2004/200460/200460pap.pdf
Moffatt, M. (2011). What are interest rates? Retrieved May 24, 2011, from
http://economics.about.com/cs/studentresources/f/interest_rate.htm
Moffatt, M. (2011). What is the demand for money? Retrieved May 24, 2011,
from http://economics.about.com/cs/money/a/money_demand.htm
Moffatt, M. (2011). What’s the difference between nominal and real?
Retrieved May 24, 2011, from
http://economics.about.com/cs/macrohelp/a/nominal_vs_real.htm
Saywer, T. (2011). Understanding interest rate fluctuations. Retrieved May
24, 2011, from http://www.badcreditloancenter.com/understandinginterest-rate-fluctuations/
SparkNotes .(2011). Tax and fiscal policy: Interest rates and fiscal policy.
Retrieved May 24, 2011, from
http://www.sparknotes.com/economics/macro/taxandfiscalpolicy/section1
.html
SparkNotes .(2011). Tax and fiscal policy: Problems. Retrieved May 24, 2011,
from
http://www.sparknotes.com/economics/macro/taxandfiscalpolicy/problem
s.html
Section 5
Week#______
Day(s) to
teach:______
Planning Guide Sheets
Page 5-19
6.03(E) Understand economic indicators to
recognize economic trends and conditions
(EC:018)
Knowledge/
Skill
Statement
Performance
Element
Understands the economic principles and concepts fundamental to business
operations
Performance
Indicator
Determine the impact of business cycles on business activities (EC:018,
EC LAP 9)
Level
Specialist
SCANS
Information 5,7-8; Systems 15; Technology 19; Basic Skills 1-2,5-6; Thinking
Skills 12
21st Century
Skills
Financial, Economic, Business and Entrepreneurial Literacy 2; Critical
Thinking and Problem Solving Skills 1, 3; Communication
Objectives
a. Define the following terms: business cycles, expansion, peak, contraction
and trough.
b. Identify the phases of a business cycle.
c. Describe the expansion phase of a business cycle.
d. Describe the peak phase of a business cycle.
e. Describe the contraction phase of a business cycle.
f. Describe the trough phase of a business cycle.
g. Explain how knowledge of business cycles benefits businesspeople.
h. Describe internal causes of business cycles.
i. Explain external causes of business cycles.
Performance
Activity
Ask students to read business articles about the current economic conditions
and to draw conclusions from those articles about the phase of the existing
business cycle. Tell them to identify causes of the phase and businesses’
reactions. Question them about whether changes are taking place that would
indicate a new phase is beginning. Have students present their conclusions
and findings to the class.
Understand economic indicators to recognize economic trends and
conditions.
Resources
LAP
MBA Research and Curriculum Center. (2011). Boom or bust (Business
cycles) [LAP: EC-009]. Columbus, OH: Author.
MBA Research and Curriculum Center. (2011). Boom or bust (Business
cycles): Instructor copy [LAP: EC-009]. Columbus, OH: Author.
Textbooks
Abel, A. B., & Bernanke, B. S. (2005). Macroeconomics (5th ed.) [pp. 276-304,
356-373]. New York: Pearson Addison Wesley.
Bovée, C. L., & Thill, J.V. (2008). Business in action (4th ed.) [p.16]. Upper
Saddle River, NJ: Pearson Prentice Hall.
Burrow, J.L. (2006). Marketing (2nd ed.) [p. 495]. Mason, OH:
Thomson/South-Western.
Clark, B., Sobel, J., & Basteri, C.G. (2010). Marketing dynamics: Teacher’s
Section 5
Planning Guide Sheets
Page 5-20
edition (2nd ed.) [pp. 128-133]. Tinley Park, IL: Goodheart-Willcox
Company, Inc.
Clayton, G.E. (2005). Economics: Principles & Practices (pp. 375-380).
Columbus, OH: Glencoe/McGraw-Hill.
Clayton, G.E. & Giesbrecht, M.G. (2004). A guide to everyday economic
statistics (6th ed.) [pp. 21-23]. New York: McGraw-Hill/Irwin.
Dlabay, L.R., Burrow, J.L., & Kleindl, B. (2009). Intro to business (7th ed.) [pp.
38-40, 176-177]. Mason, OH: South-Western Cengage Learning.
Farese, L. S., Kimbrell, G., & Woloszyk, C. A. (2009). Marketing essentials
(pp. 64-67). Woodland Hills, CA: Glencoe/McGraw-Hill.
McConnell, C.R. & Brue, S.L. (2005). Economics: Principles, problems, and
policies (16th ed.) [pp. 133-135]. New York: McGraw-Hill/Irwin.
Miller, R.L. (2005). Economics: Today and tomorrow (pp. 360-367).
Columbus, OH: Glencoe/McGraw-Hill.
Miller, R.L., & Stafford, A.D. (2010). Economic education for consumers (4th
ed.) [pp. 582-584]. Mason, OH: South-Western Cengage Learning.
O’Sullivan, A. & Sheffrin, S.M. (2003). Economics: Principles in action (pp.
310-316). Upper Saddle River, NJ: Prentice Hall.
Sexton, R.L. (2003). Essentials of economics (pp. 264-268). Mason, OH:
Thomson/South-Western.
Software/
Online
AmosWEB. (2000-2011). Business cycle phases. Retrieved May 24, 2011,
from http://www.amosweb.com/cgibin/awb_nav.pl?s=wpd&c=dsp&k=business+cycle+phases
AmosWEB. (2000-2011). Business cycles. Retrieved May 24, 2011, from
http://www.amosweb.com/cgibin/awb_nav.pl?s=wpd&c=dsp&k=business+cycles
AmosWEB. (2000-2011). Contraction. Retrieved May 24, 2011, from
http://www.amosweb.com/cgibin/awb_nav.pl?s=wpd&c=dsp&k=contraction
AmosWEB. (2000-2011). Expansion. Retrieved M May 24, 2011, from
http://www.amosweb.com/cgibin/awb_nav.pl?s=wpd&c=dsp&k=expansion
AmosWEB. (2000-2011). Peak. Retrieved May 24, 2011, from
http://www.amosweb.com/cgi-bin/awb_nav.pl?s=wpd&c=dsp&k=peak
AmosWEB. (2000-2011). Trough. Retrieved May 24, 2011, from
http://www.amosweb.com/cgi-bin/awb_nav.pl?s=wpd&c=dsp&k=trough
MBA Research and Curriculum Center. (2011). Boom or Bust [LAP: EC-009:
Presentation Software]. Columbus, OH: Author.
Moffatt, M. (2011). What is the business cycle? Retrieved May 24, 2011, from
http://economics.about.com/cs/studentresources/f/business_cycle.htm
Romer, C.D. (2008). Business cycles. Retrieved May 24, 2011, from
http://www.econlib.org/Library/Enc/BusinessCycles.html
Tatum, M. (2011). What is a business cycle ? Retrieved May 24, 2011, from
http://www.wisegeek.com/what-is-a-business-cycle.htm
Section 5
Key Points
Briefing: Business Cycles
Page 5-21
Define business cycles.
The ups and downs in economic activity
Business fluctuations
Periods of expansion and contraction in economic activities (i.e., production,
consumption, exchange, and distribution)
They affect all aspects of our economy, including employment, prices, incomes,
and production.
Describe that when studying business cycles, economists examine
fluctuations in the level of an economy’s total output.
Total output is based on real gross domestic product (GDP).
Read GDP is GDP that has been adjusted for inflation.
As a country’s real GDP increases, economic activities increase; the economy
grows.
As a country’s real GDP decreases, so do its economic activities; the economy
declines.
Explain the benefits of a growing economy.
Provides a higher standard of living
Creates new and additional jobs
Enables the government to fulfill its duties more thoroughly
Resolves domestic problems
Discuss the importance of understanding business cycles.
Businesspeople can take steps to avoid the extreme ups and downs of the cycle
by anticipating changes needed in employment, production, pricing, and
purchasing.
Describe the unpredictability of business cycles.
There’s no exact way to predict the length or severity of a business cycle.
Some have lasted two years, others 10 years.
It’s difficult to predict the beginning and end of cycles.
This heightens the uncertainty of producers and consumers.
Section 5
Briefing: Business Cycles
Page 5-22
Explain the phases of business cycles.
Expansion: the growth part of the cycle; a time of economic prosperity; everyone
has a hopeful economic outlook and spends more money (i.e., consumers buy
more durable goods; producers invest in new equipment that enables them to
produce more goods and services); demand, therefore, is increasing which
requires more workers to be hired and more factories and businesses to be built;
more money is put into the circulation and interest rates are decreased by the
Federal Reserve System.
Peak: the high point of the economic prosperity that has existed; demand begins
to exceed production capacities, and producers raise prices to offset the high
demand; interest rates begin to rise; demand for all resources exceeds their
availability; everyone has a less hopeful economic outlook, and consumers begin
to save more so that their spending decreases; economic activities level off.
Contraction: The demand for goods/services begins to fall and unemployment
rises; a bad time for businesses since consumers are spending less and saving
more; businesses’ bottom lines suffer, and some are experiencing losses to the
point that they are forced to close; demand continues to fall, and production is
decreased; inventories build up causing workers to lose their jobs, thereby further
decreasing the demand for goods and services; prices decrease to attract
customers; interest rates decrease. When a contraction lasts for six months, it’s
considered a recession. If a recession continues and is severe, it’s a depression;
many people lose their jobs, and businesses fail.
Trough: The final phase of a business cycle; reached when economic activities
stop their decline. This is the low point of economic activity when unemployment
is very high, and even more businesses fail. This phase stays in effect until
consumers and producers become more hopeful about the economy and start to
buy more goods and services.
Discuss internal causes of business cycles that take place within the
economic system itself.
Aggregate demand: This is the total demand for an economy’s goods and
services and can pull GDP up or down to cause business cycles. When it’s
rising, businesses increase production, more workers are hired, and
employees earn more to spend on goods and services. If aggregate demand
continues to grow to the point that production can’t meet demand, prices will
rise rapidly—known as inflation, and consumers have to pay more to buy the
same goods and services. If aggregate demand decreases, production and
employment will decrease, and production will slow. Recessions or
depressions result when aggregate demand stays too low for a long time.
Once it starts rising again, expansion and prosperity return.
Money supply: This is the total quantity of money that exists at one time in a
nation, and as it goes up or down, so does the economy. The federal
government restricts the flow of money by raising taxes, raising the interest
rates to borrow money, and purchasing fewer goods and services to run the
government. The amount of money in circulation can be increased when the
federal government spends more, lowers interest rates, and lowers taxes.
When interest rates are low, more money can be borrowed to build houses,
office buildings, and industrial plans. Greater production results in more
available work and lowered unemployment rates. This is a period of
expansion. When money is in short supply, unemployment will be high,
business activities slow down, and a period of contraction begins.
Investment in capital goods: When producers are hopeful about the future
of business, they buy new equipment and build or expand their business
Section 5
Briefing: Business Cycles
Page 5-23
facilities. This investment encourages the expansion of economic activities.
When producers decrease their investment in capital goods, economic
activities contract.
Inventory levels: When producers are optimistic about business activity, they
increase their inventory levels to be prepared for the increase in demand,
thereby expanding economic activities. When they feel less hopeful, they
decrease their buying of new goods and try to sell the ones on hand, thereby
causing the economy to contract.
Explain external causes of business cycles that take place outside the
economic system.
Political changes. A change in the political party in power can cause
changes in economic activities. For example, if the elected officials support
business interests, economic activities are likely to expand.
Climatic changes. Many jobs are affected by climatic conditions. Extreme
weather conditions, such as droughts, floods, and blizzards, can negatively
affect many economic activities.
International relations. The interaction of our country with other countries
can expand or contract economic activities. For example, a war or conflict
may increase the production of defense materials, thereby expanding our
economic activities. When the conflict ends, the same quantity of defense
materials will no longer be needed, thereby contracting economic activities.
Discoveries and innovations. The discovery of new products, techniques,
and resources can stimulate economic activities. Large sums of money must
be invested to develop and improve the products, and a variety of new jobs is
created. Since these occur irregularly, they contribute to changes in economic
activities.
Section 5
Planning Guide Sheets
Page 5-24
6.04 Determine global trade’s impact on business
decision-making. (EC:016), (EC:100), (EC:045)
(SUPPLEMENTAL)
Knowledge/
Skill
Statement
Understands the economic principles and concepts fundamental to business
operations
Performance
Element
Determine global trade’s impact on business decision-making.
Performance
Indicator
Explain the nature of global trade (EC:016, EC LAP 4) (SUPPLEMENTAL)
Level
Specialist
SCANS
Information 7; Systems 15; Basic Skills 1-2, 5-6; Thinking Skills 12
21st Century
Skills
Global Awareness 1; Financial, Economic, Business and Entrepreneurial
Literacy 2; Critical Thinking and Problem Solving Skills 1, 3; Communication
& Collaboration 1
Objectives
a.
b.
c.
d.
e.
f.
Performance
Activity
Define the following terms: imports, exports, international trade, absolute
advantage, and comparative advantage.
Describe reasons that international trade takes place.
List gains from international trade.
Identify ways in which the U.S. economy is affected by international
trade.
Describe types of trade barriers.
Explain techniques used by governments to improve international trade
relations.
Arrange for students to participate in a service-learning project being
conducted at an elementary or middle school to explain to younger students
why the United States would trade with other countries when it has an
absolute advantage. Have them prepare visuals to support the presentation
and activities to reinforce it. Ask students to analyze the strengths and
weaknesses of the presentation, identifying changes that they would make if
they were able to repeat the presentation.
Resources
LAP
Marketing Education Resource Center. (2005). Beyond US [LAP: EC-004].
Columbus, OH: Author.
Marketing Education Resource Center. (2005). Beyond US: Instructor copy
[LAP: EC-004]. Columbus, OH: Author.
Textbooks
Abel, A. B., & Bernanke, B. S. (2005). Macroeconomics (5th ed.) [pp. 8-9].
New York: Pearson Addison Wesley.
Boone, L. E. & Kurtz, D.L. (2006). Contemporary marketing (pp. 227-243).
Mason, OH: Thomson South-Western.
Bovée, C. L., & Thill, J.V. (2008). Business in action (4th ed.) [pp. 56-66].
Upper Saddle River, NJ: Pearson Prentice Hall.
Section 5
Planning Guide Sheets
Page 5-25
Brown, B.J. & Clow, J.E. (2006). Introduction to business (pp. 146-155).
Woodland Hills, CA: Glencoe/McGraw-Hill.
Burrow, J.L. (2006). Marketing (2nd ed.) [pp. 37, 482-486]. Mason, OH:
Thomson/South-Western.
Clark, B., Sobel, J., & Basteri, C.G. (2010). Marketing dynamics: Teacher’s
edition (2nd ed.) [pp. 147-153, 176]. Tinley Park, IL: Goodheart-Willcox
Company, Inc.
Dlabay, L.R., Burrow, J.L., & Kleindl, B. (2009). Intro to business (7th ed.) [pp.
53-69]. Mason, OH: South-Western Cengage Learning.
Etzel, M.J., Walker, B.J. & Stanton, W.J. (2007). Marketing (14th ed.)
[pp. 48-64]. New York: McGraw-Hill/Irwin.
Farese, L.S., Kimbrell, G. & Woloszyk, C.A. (2009). Marketing essentials
(pp. 74-89). Woodland Hills, CA: Glencoe/McGraw-Hill.
Miller, R.L., & Stafford, A.D. (2010). Economic education for consumers (4th
ed.) [pp. 565-571]. Mason, OH: South-Western Cengage Learning.
Rue, L.W. & Byars, L.L. (2006). Business management: Real-world
applications & connections (pp. 152-171). Woodland Hills, CA: McGrawHill/Glencoe.
Software/
Online
Americans and the World. (n.d.). International trade. Retrieved May 24, 2011,
from http://www.americansworld.org/digest/global_issues/intertrade/summary.cfm
AmosWEB. (2011). Absolute advantage. Retrieved May 24, 2011, from
http://www.amosweb.com/cgibin/awb_nav.pl?s=wpd&c=dsp&k=absolute+advantage
AmosWEB. (2011).Comparative advantage. Retrieved May 24, 2011, from
http://www.amosweb.com/cgibin/awb_nav.pl?s=wpd&c=dsp&k=comparative+advantage
AmosWEB. (2011). Exports. Retrieved May 24, 2011, from
http://www.amosweb.com/cgi-bin/awb_nav.pl?s=wpd&c=dsp&k=exports
AmosWEB. (2011). Imports. Retrieved May 24, 2011, from
http://www.amosweb.com/cgi-bin/awb_nav.pl?s=wpd&c=dsp&k=imports
AmosWEB. (2011). International trade. Retrieved May 24, 2011, from
http://www.amosweb.com/cgibin/awb_nav.pl?s=wpd&c=dsp&k=international+trade
AmosWEB. (2011). Trade barriers. Retrieved May 24, 2011, from
http://www.amosweb.com/cgibin/awb_nav.pl?s=wpd&c=dsp&k=trade+barriers
Marketing Education Resource Center. (2005). Beyond US [LAP: EC-004:
Presentation Software]. Columbus, OH: Author.
McGaughey, C. (2004, May 24). U.S. farmers and the Cuban embargo.
Retrieved May 24, 2011, from
http://www.econedlink.org/lessons/index.cfm?lesson=EM529&page=teac
her
U.S. Department of Commerce. (n.d.). International Trade Administration.
Retrieved May 24, 2011, from http://trade.gov/index.asp
Section 5
Planning Guide Sheets
Page 5-26
Knowledge/
Skill
Statement
Understands the economic principles and concepts fundamental to business
operations
Performance
Element
Determine global trade’s impact on business decision-making.
Performance
Indicator
Describe the determinants of exchange rates and their effects on the
domestic economy (EC:100) (SUPPLEMENTAL)
Level
Specialist
SCANS
Information 5,7; Systems 15; Basic Skills 1-3, 5-6; Thinking Skills 11-12
21st Century
Skills
Global Awareness 1; Financial, Economic, Business and Entrepreneurial
Literacy 2; Critical Thinking and Problem Solving Skills 1, 3
Objectives
a.
b.
c.
d.
e.
f.
g.
h.
i.
j.
k.
l.
m.
n.
o.
Performance
Activity
Define the terms exchange rate, exchange-rate quotation, free-floating
currency, pegged currency, foreign-exchange market, strong/weak
dollar, and arbitrage.
Distinguish between direct and indirect exchange-rate quotations.
Interpret exchange rates.
Identify factors that increase demand for currencies.
Explain factors that cause a currency to lose value relative to other
currencies.
Discuss how economic factors affect exchange rates.
Explain how market psychology can affect exchange rates.
Describe how political conditions can influence exchange rates.
Distinguish between free-floating and pegged currency.
Describe factors that influence free-floating currency.
Identify institutions that utilize the foreign exchange market.
Discuss types of financial instruments used in foreign exchange
markets.
Explain the advantages/disadvantages of a strong U.S. dollar.
Describe the advantages/disadvantages of a weak U.S. dollar.
Explain the risks of speculating on the price of foreign currency.
Tell students to imagine that they are a U.S. importer who is trying to decide
among three countries from which to obtain goods. Ask them to select both
the product and the countries. The product selected should be one of interest
to the student, and the countries identified should actually export the item.
Have students write a memorandum to the company’s owner recommending
one of the countries based on exchange rates. Tell students to compare and
discuss their memorandums with a classmate.
Resources
Textbooks
Abel, A.B., & Bernanke, B.S. (2005). Macroeconomics (5th ed.) [pp.469, 479].
New York: Pearson Addison Wesley.
Bovée, C. L. & Thill, J.V. (2008). Business communication today (9th ed.) [pp.
65-66]. Upper Saddle River, NJ: Pearson Prentice Hall.
Burrow, J.L. (2006). Marketing (2nd ed.) [p. 488]. Mason, OH:
Thomson/South-Western.
Clark, B., Sobel, J., & Basteri, C.G. (2010). Marketing dynamics: Teacher’s
Section 5
Planning Guide Sheets
Page 5-27
edition (2nd ed.) [pp. 151-153]. Tinley Park, IL: Goodheart-Willcox
Company, Inc.
Clayton, G.E. (2005). Economics: Principles & Practices (pp. 481-485).
Columbus, OH: Glencoe/McGraw-Hill.
Clayton, G.E. & Giesbrecht, M.G. (2004). A guide to everyday economic
statistics (6th ed.) [pp. 142-147]. New York: McGraw-Hill/Irwin.
Dlabay, L.R., & Burrow, J.L. (2008). Business finance (pp. 55-56, 382-388).
Mason, OH: South-Western Cengage Learning.
Dlabay, L.R., Burrow, J.L., & Kleindl, B. (2009). Intro to business (7th ed.) [p.
58]. Mason, OH: South-Western Cengage Learning.
Farese, L. S., Kimbrell, G., & Woloszyk, C. A. (2009). Marketing essentials
(pp. 86, 167). Woodland Hills, CA: Glencoe/McGraw-Hill.
Kapoor, J.R., Dlabay, L.R., Hughes, R.J., & Hoyt, W.B. (2005). Business and
personal finance (p. 248). New York: Glencoe/McGraw-Hill.
McConnell, C.R. & Brue, S.L. (2005). Economics: Principles, problems, and
policies (16th ed.) [pp. 715-727]. New York: McGraw-Hill/Irwin.
Miller, R.L. (2005). Economics: Today and tomorrow (pp. 479-482).
Columbus, OH: Glencoe/McGraw-Hill.
Miller, R.L., & Stafford, A.D. (2010). Economic education for consumers (4th
ed.) [pp.576-578]. Mason, OH: South-Western Cengage Learning.
O’Sullivan, A. & Sheffrin, S.M. (2003). Economics: Principles in action (pp.
458-464). Upper Saddle River, NJ: Prentice Hall.
Sexton, R.L. (2003). Essentials of economics (pp. 449-456). Mason, OH:
Thomson/South-Western.
Software/
Online
AmosWEB. (2000-2011). Exchange rate. Retrieved May 24, 2011, from
http://www.amosweb.com/cgibin/awb_nav.pl?s=wpd&c=dsp&k=exchange+rate
AmosWEB. (2000-2011). Foreign exchange rate. Retrieved May 24, 2011,
from http://www.amosweb.com/cgibin/awb_nav.pl?s=wpd&c=dsp&k=foreign+exchange+market
Cross-Curricular Connections. (2002, October 23). Marketplace: Let’s go
Euro ! Retrieved May 24, 2011, from
http://www.econedlink.org/lessons/index.cfm?lesson=EM299&page=teac
her
Forex Trading. (n.d.). Exchange rate. Retrieved May 24, 2011, from
http://www.forex-trading-i.com/exchange-rate.html
Grabianowski, E. (1998-2011). How exchange rates work. Retrieved May 24,
2011, from http://money.howstuffworks.com/exchange-rate.htm
Heakal, R. (2011). Floating and fixed exchange rates. Retrieved May 24,
2011, from http://www.investopedia.com/articles/03/020603.asp
Hupp, J. (2011). 50 factors that affect the value of the US dollar. Retrieved
May 24, 2011, from http://www.currencytrading.net/2007/50-factors-thataffect-the-value-of-the-us-dollar/
Stott, D. (2004, October 15). Weak dollar. Retrieved May 24, 2011, from
http://www.gold-eagle.com/gold_digest_04/stott101404.html
Wynn, L.S. (2011, April 10). What is arbitrage? Retrieved May 24, 2011, from
http://www.wisegeek.com/what-is-arbitrage.htm
Section 5
Planning Guide Sheets
Page 5-28
Knowledge/
Skill
Statement
Understands the economic principles and concepts fundamental to business
operations
Performance
Element
Determine global trade’s impact on business decision-making.
Performance
Indicator
Discuss the impact of culture and social issues on global trade (EC:045,
EC LAP 24) (SUPPLEMENTAL)
Level
Specialist
SCANS
Information 5,7; Interpersonal 14; Systems 15; Basic Skills 1-2, 5-6; Thinking
Skills 12
21st Century
Skills
Global Awareness 1, 3; Financial, Economic, Business and Entrepreneurial
Literacy 2; Critical Thinking & Problem Solving 1, 3; Communication &
Collaboration 1
Objectives
a.
Performance
Activity
Ask students to select a country of interest, research its culture, and identify
aspects of the country’s culture that would impact marketing activities. Tell
students to use a software program to prepare an informative brochure that
could be used by marketers to help them succeed in doing business in that
country. Encourage students to import pictures into the brochure to depict the
cultural aspects identified. Have students present the brochure to the class.
Resources
Describe Hofstede’s dimensions of national cultures (i.e., individualism
vs. collectivism, power distance, uncertainty avoidance, masculinity vs.
femininity).
b. Explain why business subcultures shape the behaviors of
businesspeople.
c. Explain how language impacts knowing when and how business will be
conducted.
d. Explain how culture influences communication.
e. Discuss how the interrelationship of business law and religion impacts
international business activities.
f.
Identify ways to overcome issues with the crossover of business law and
religion in international business activities.
g. Describe how corruption impacts international business activities.
h. Explain how a country’s level of involvement impacts international trade.
i.
Discuss how culture can hamper international trade.
j.
Explain how culture can impact trade partner selection.
k. Describe how culture can impact negotiations in international trade.
l.
Discuss how culture can impact product delivery in international trade.
m. Explain how positive/negative experiences with a culture can update
one’s beliefs.
n. Describe how culture can impact the selection of trade goals in
international trade.
Section 5
Planning Guide Sheets
Page 5-29
MBAResearch and Curriculum Center. (2012). On top of the world [LAP: EC024]. Columbus, OH: Author. (Available Fall 2011)
MBAResearch and Curriculum Center. (2012). On top of the world: Instructor
copy [LAP: EC-024]. Columbus, OH: Author. (Available Fall 2011)
Textbooks
Ball, D.A., McCulloch, W.H., Frantz, P.L., Geringer, J.M., & Minor, M.S.
(2006). International business: The challenge of global competition (10th
ed.) [pp. 177-209]. Boston: McGraw-Hill/Irwin.
Boone, L. E. & Kurtz, D.L. (2006). Contemporary marketing (pp. 160, 228230). Mason, OH: Thomson South-Western.
Bovée, C. L. & Thill, J.V. (2008). Business communication today (9th ed.) [pp.
68-82]. Upper Saddle River, NJ: Pearson Prentice Hall.
Bovée, C. L., & Thill, J.V. (2008). Business in action (4th ed.) [pp. 66-69, 124,
132, 222]. Upper Saddle River, NJ: Pearson Prentice Hall.
Burrow, J.L. (2006). Marketing (2nd ed.) [pp. 495-496]. Mason, OH:
Thomson/South-Western.
Clark, B., Sobel, J., & Basteri, C.G. (2010). Marketing dynamics: Teacher’s
edition (2nd ed.) [pp. 169-172]. Tinley Park, IL: Goodheart-Willcox
Company, Inc.
Dlabay, L.R., Burrow, J.L., & Kleindl, B. (2009). Intro to business (7th ed.) [pp.
60-61]. Mason, OH: South-Western Cengage Learning
Farese, L. S., Kimbrell, G., & Woloszyk, C. A. (2009). Marketing essentials (p.
86). Woodland Hills, CA: Glencoe/McGraw-Hill.
Software/
Online
BizAims. (2009, February 27). Cultural differences in business. Retrieved May
24, 2011, from
http://www.bizaims.com/articles/business+economy/cultural+differences
+business
Cyborlink.com. (1998-2011). Retrieved May 24, 2011, from
http://www.cyborlink.com/
Geert Hofsteade and Geert Jan Hofsteade. (n.d.). Culture. Retrieved May 24,
2011, from http://www.geerthofstede.nl/culture.aspx
ITIM International. (1967-2009). Geert Hofstede™ cultural dimensions.
Retrieved May 24, 2011, http://www.geert-hofstede.com/
Kwintessential. (n.d.). Cross culture business blunders. Retrieved May 24,
2011, from http://www.kwintessential.co.uk/culturalservices/articles/crosscultural-blunders.html
Kwintessential. (n.d.). Language, intercultural, cross cultural, expatriate, and
business articles. Retrieved May 24, 2011, from
http://www.kwintessential.co.uk/cultural-services/articles.html
MBAResearch and Curriculum Center (2012). On top of the world [LAP: EC24—Presentation Software]. Columbus, OH: Author. (Available Fall
2011)
Mind Tools. (1995-2011). Cross-cultural business etiquette: Learning the ins
and outs of global business. Retrieved May 24, 2011, from
http://www.mindtools.com/pages/article/CrossCulturalBusinessEtiquette.htm
Mody, A. (1999-2011). Effective cross culture communication in international
business. Retrieved May 24, 2011, from
http://www.ehow.com/way_5903972_effective-cultural-communicationinternational-business.html
WikiUniversity.com (2007). Unit 1.2: Cultural issues affecting international
Section 5
Planning Guide Sheets
Page 5-30
trade. Retrieved May 24, 2011, from
http://en.wikiversity.org/wiki/Cultural_Issues_Affecting_International_Tra
de
Section 5
Planning Guide Sheets
Page 5-31