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Ansley Bennett
Lanier Middle School
What do they have in common?
How is Economic Growth
              Measured?
• Economic growth in a country is measured by
  the country’s Gross Domestic Product (GDP)
  in one year
• GDP = the total amount of final goods and
  services produced in one year within a
  country
Gross Domestic Product
• GDP is the total value of all the goods and
  services produced in that country in one year
  – Tells how rich or poor a country is
  – Shows if the country’s economy is getting better
    or worse
• Raising the GDP of a country can improve
  the country’s standard of living
Standard of Living
• The quality of life of the people within a country
  – The higher a country’s GDP, the better quality of life –
    standard living increases
• In order for a country to have an increasing GDP,
  it must invest in human capital through
  education & training, and it must produce goods
  that have value to be sold within the country or
  exported.
4 Factors of Economic Growth

• There are four factors that determine a
  country’s Gross Domestic Product for the year:
  – Natural Resources
  – Human Capital
  – Capital Goods
  – Entrepreneurship
The Role of Natural
                    Resources
• “Gifts of Nature”
• Important to countries: without them, countries
  must import the resources they need (costly)
  – Countries that have a lot of natural resources are able
    to use them to produce goods & services cheaper than a
    country that has to import natural resources
• If a country has many natural resources, it can also
  trade them with other countries and make money
  for the economy
Human Capital
• Value that humans bring to the marketplace
   – Nations that invest in the health, education, and training of their
     people will have a more valuable workforce
• Human capital includes education, training, skills, and
  healthcare of the workers and the value that they bring to
  the country’s economy
   – Examples: computer/reading/writing/math skills, talents in
     music/sports/acting, ability to follow directions, ability to serve as
     group leader & cooperate with group members
• A country’s literacy rate impacts human capital
   – the percent of the population over 15 that can read/write
How does Human Capital
       Influence Economic Growth?
• Nations that invest in the health, education, &
  training of their people will have a more valuable
  workforce that produces more goods & services

• People that have training are more likely to
  contribute to technological advances, which leads
  to finding better uses of natural resources &
  producing more goods
Investment in Capital Goods
• To increase GDP, countries must also invest in
  capital goods:
  – All of the factories, machines, technologies, buildings,
    and property needed by businesses to operate
  – Examples: tools, equipment, factories, technology,
    computers, lumber, machinery, etc.
  The more capital goods a country has = the more goods
    & services they are able to produce = the more money
    they can make!
The Role of Entrepreneurship
• People who take the risk to start and operate a
  business are called entrepreneurs
  – These people risk their own money and time because
    they believe their business ideas will make a profit
• Entrepreneurs must organize their businesses well
  for them to be successful
  – They bring together natural, human, and capital
    resources to produce foods or services to be provided by
    their businesses
How does Entrepreneurship
     Influence Economic Growth?
• Entrepreneurship creates jobs and lessens
  unemployment
• Encourages people to take risks, and in doing so,
  they create better healthcare, education, &
  welfare programs
• The more entrepreneurs a country has, the
  higher the country’s GDP will be…
Let’s Review…
Fashion Show!
 • Your task:
 • With your group, you will be creating four
   hats (one for each factor of economic growth)
       – We will show off the hats in our class fashion
         show!
 • Make sure that you include at least 3 symbols
   that represent the factor on your hat!
1.   Natural Resources
2.   Capital Goods
3.   Human Capital
4.   Entrepreneurship

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Four factors of economic growth

  • 2. What do they have in common?
  • 3. How is Economic Growth Measured? • Economic growth in a country is measured by the country’s Gross Domestic Product (GDP) in one year • GDP = the total amount of final goods and services produced in one year within a country
  • 4. Gross Domestic Product • GDP is the total value of all the goods and services produced in that country in one year – Tells how rich or poor a country is – Shows if the country’s economy is getting better or worse • Raising the GDP of a country can improve the country’s standard of living
  • 5.
  • 6. Standard of Living • The quality of life of the people within a country – The higher a country’s GDP, the better quality of life – standard living increases • In order for a country to have an increasing GDP, it must invest in human capital through education & training, and it must produce goods that have value to be sold within the country or exported.
  • 7. 4 Factors of Economic Growth • There are four factors that determine a country’s Gross Domestic Product for the year: – Natural Resources – Human Capital – Capital Goods – Entrepreneurship
  • 8. The Role of Natural Resources • “Gifts of Nature” • Important to countries: without them, countries must import the resources they need (costly) – Countries that have a lot of natural resources are able to use them to produce goods & services cheaper than a country that has to import natural resources • If a country has many natural resources, it can also trade them with other countries and make money for the economy
  • 9. Human Capital • Value that humans bring to the marketplace – Nations that invest in the health, education, and training of their people will have a more valuable workforce • Human capital includes education, training, skills, and healthcare of the workers and the value that they bring to the country’s economy – Examples: computer/reading/writing/math skills, talents in music/sports/acting, ability to follow directions, ability to serve as group leader & cooperate with group members • A country’s literacy rate impacts human capital – the percent of the population over 15 that can read/write
  • 10. How does Human Capital Influence Economic Growth? • Nations that invest in the health, education, & training of their people will have a more valuable workforce that produces more goods & services • People that have training are more likely to contribute to technological advances, which leads to finding better uses of natural resources & producing more goods
  • 11. Investment in Capital Goods • To increase GDP, countries must also invest in capital goods: – All of the factories, machines, technologies, buildings, and property needed by businesses to operate – Examples: tools, equipment, factories, technology, computers, lumber, machinery, etc. The more capital goods a country has = the more goods & services they are able to produce = the more money they can make!
  • 12. The Role of Entrepreneurship • People who take the risk to start and operate a business are called entrepreneurs – These people risk their own money and time because they believe their business ideas will make a profit • Entrepreneurs must organize their businesses well for them to be successful – They bring together natural, human, and capital resources to produce foods or services to be provided by their businesses
  • 13. How does Entrepreneurship Influence Economic Growth? • Entrepreneurship creates jobs and lessens unemployment • Encourages people to take risks, and in doing so, they create better healthcare, education, & welfare programs • The more entrepreneurs a country has, the higher the country’s GDP will be…
  • 15.
  • 16. Fashion Show! • Your task: • With your group, you will be creating four hats (one for each factor of economic growth) – We will show off the hats in our class fashion show! • Make sure that you include at least 3 symbols that represent the factor on your hat! 1. Natural Resources 2. Capital Goods 3. Human Capital 4. Entrepreneurship