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I: Business Cycle: Four cycles in an economy

Objective 9.01-9.04 Identify the phases of the business cycle and the economic indicators used to measure economic activities and trends. Assess how current events impact decisions by consumers, producers, and government policy makers. I: Business Cycle: Four cycles in an economy

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I: Business Cycle: Four cycles in an economy

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  1. Objective 9.01-9.04 Identify the phases of the business cycle and the economic indicators used to measure economic activities and trends. Assess how current events impact decisions by consumers, producers, and government policy makers. I: Business Cycle: Four cycles in an economy A: Peak: period of prosperity, strong productivity, general financial well-being. B: Contraction: a decline in economic activity C: Trough: the economy has “bottomed out” low point in the business cycle. 1. recession: two consecutive quarters of declining output ( 4 quarters in a year) 2. depression: a deeper and longer recession; low production, high unemployment, bus. failures. (The Great Depression of the 1930’s) D: Expansion: growth period, low unemployment, increased output, high productivity.

  2. II: Economic Indicators of a healthy or sick economy • A: Gross Domestic Product (GDP) is calculated by adding up the value of this country’s annual output of all final goods and services. ( Ex: the house, not the lumber, nails, etc. ) Includes everything produced in that country; a Japanese car manufactured in Tennessee is counted but something manufactured in Mexico or Japan is not)

  3. B: Gross National Product: (GNP) : is a measure of the market value of all goods and services produced by Americans in one year. (Ex: American Oil Co. in Scotland) An American car company that produces cars in Mexico is included. • C: Consumer Price Index: measures the average change in prices for such items as housing and food for the average urban consumer. The market basket. • 1. CPI is used to calculate inflation. • CPI for 1979 was 72.6 and the CPI for 1980 was 82.4 before Reagan took over as president. • D: Real GDP: GDP that is adjusted for inflation. This is the number most economists rely on.

  4. Boom or Bust • WHAT HAPPENS IN A BOOM? • - Businesses produce more goods- Businesses invest in more machinery- Consumers spend more money. There is a FEELGOOD FACTOR- Less money is spent by the Government on unemployment benefits- More money is collected by the Government in income tax and VAT- Prices tend to increase due to extra demand

  5. WHAT HAPPENS IN A RECESSION? • - Businesses cut back on production- Some businesses may go bankrupt- Consumers spend less money. There is a fall in the FEELGOOD FACTOR- Individuals may lose their jobs- More money is spent by the Govt on unemployment benefits- Less money is collected by the Govt in income tax and VAT (Value added tax)- Prices start to fall

  6. The Business Cycle

  7. The National Bureau of Research (NBER) measures the state of the economy on three factors: • Employment • Personal income • Industrial Production • Manufacturing and Trade sales

  8. Economic Indicators Continued • E: Per Capita GDP: is the value of what a person produces in a year • 1. it is calculated by dividing the GDP by the number of people who live in a nation. • F: Standard of Living: measures prosperity and wealth. Education, income, debt levels, and housing quality contribute to this economic indicator.

  9. III: Government Debt and Global Competition. • A: National Debt: the total amount a country has borrowed plus interest on that debt. • Downsizing: when businesses cut their workforce to cut costs, and increase profits. • Outsourcing: when another company, often overseas, manages part of their operations, such as customer service and information technology.

  10. Read p. 636 Answer 2&4

  11. Goal 9.02, 9.03 Describe the impact of gov’t regulation on specific economic activities and explain the impact of the movement of human and capital resources in the US economy • I: Gov’t Regulation • A: Environmental protection: • 1. the EPA monitors and enforces pollution levels from industries. Debate today: Does it have too much power since it can bypass Congress and enact administrative laws that impact citizens? B: Consumer Protection: 1. the gov’t has mandated warning labels on products.

  12. C: Labor Disputes: • 1. The Federal Mediation and Conciliation Service is the main federal agency for helping to resolve labor and management conflicts.

  13. II: Deregulation • A: Deregulation removes gov’t rules from businesses and the economy to create a freer marketplace. • 1. Firms in a strong financial position typically benefit, while firms in a weak position suffer. Causes mergers and buyouts.

  14. III: Population Shifts • A: Migration or a population shift occurs many reasons such as job opportunities, lower taxes, and affordable property. • 1. People are leaving the Rust Belt and Frost Belt (northeast) and (Great Lakes area) and moving to the Sun Belt (southeast) because of taxes, right to work laws, affordable housing. • 2. California is losing population due to taxation and high cost of living.

  15. How will these changes in population affect the South? • Write a short answer to how population shifts could affect the political, economic, and social character of the south?

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