Transcript Human capital, Investment goods and GDP

Human capital, Investment goods
and GDP
SS6E3 a & b
4 factors of production are needed to
produce goods and services:
•
•
•
•
Natural resources (land)
Human resources (labor)
Capital resources (buildings and machinery)
Entrepreneurship (organization)
Gross Domestic Product
• GDP of a country is the total value of all the
goods and services produced in a country in
one year.
• Indicator as to how rich or poor a country is.
• Raising the GDP results in a higher standard of
living for the people of the country.
Human Capital
• Investing in the education, training, skills and
health of the workers in a business or country.
• To increase GDP countries must invest in
human capital.
Aeropostale
If the workers in a country who produce
aeropostale clothing are uneducated or
untrained, they will be limited in the kind of work
they can do. An unskilled workforce limits the
types of industry that can develop. If workers are
unhealthy, they cannot produce the goods and
services that are needed. Businesses and
countries that want to be successful must pay
attention to investing in human capital.
Successful businesses help to increase the GDP of
a country to improve the standard of living for all.
Physical Capital
• Includes the factories, machines, technologies,
buildings, and property needed for a business
to operate.
• If a business is to be successful, it cannot let
its equipment break down or have its
buildings fall apart.
• New technology can help a business produce
more goods at a lower cost.
TransCanada Sock Company
• The TransCanada Sock Company makes wools socks.
They are using the same equipment they have used
for thirty years. The company makes good socks, and
customers are satisfies with the quality and price. A
new company, Great White North Wool Socks, opens.
This company has invested in new technology that
reduces the cost of wool socks. Customers are
satisfied with the quality of the new socks, and they
like the lower price. TransCanada Sock Company has
a problem. They are losing customers to the new
company. They decide to buy newer and better
equipment so they can make more socks for a
cheaper price. They are investing in physical capital.
DQ 1
• How does investment in capital by companies
help a country to increase its GDP?
DQ 2
• What are some examples of human capital?
• What are some examples of physical capital?
DQ 3
• Why are entrepreneurs so important to the
economies around the world?
• What questions would you ask in an interview
with an entrepreneur, if you were trying to
start your own business?