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The Business Cycle

The Business Cycle. Ch.3 - Glencoe. The Business Cycle. Economies go through ups and downs as a result of wars, foreign competition and changes in technology Business Cycle – rise fall of economic activity over time. Business Cycle Model. PROSPERITY. PROSPERITY. RECESSION. RECESSION.

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The Business Cycle

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  1. The Business Cycle Ch.3 - Glencoe

  2. The Business Cycle Economies go through ups and downs as a result of wars, foreign competition and changes in technology Business Cycle – rise fall of economic activity over time

  3. Business Cycle Model PROSPERITY PROSPERITY RECESSION RECESSION (growth) RECOVERY (growth) (slowdown) (slowdown) DEPRESSION (lowest point)

  4. Recession Recession – economic activity slows down Spending and demand for product decreases Business produce less = need fewer employees Unemployment rate increases = people spend less Can affect only one industry, related industries, or spread to the entire economy Ripple Effect – when a recession in one industry leads to an effect in another

  5. Prosperity Prosperity – is a peak of economic activity. Unemployment is low Production of goods and services is high New businesses open Wages are usually higher High number of imports

  6. Eras that Changed the Economy The Era of Mass Production 1914 – 1995. World War I (WWI) was the first mechanized war. It created a demand for massive resources. By the end of WWI, Henry Ford had perfected the assembly line. How did the assembly line change American society?

  7. Depression • Depression - A deep recession that affects the entire economy and lasts for several years • High unemployment • Low production of goods and services • Spreads to related countries • Depressions are rare • Examples: “Black Tuesday” Great Depression 1929-1933

  8. Recovery • Recovery – a rise in business activity after a recession or depression • Production starts to increase • People go back to work and have money to spend • New demand for goods and services • News businesses open, but need to be innovative • Be on the edge of the competition to recover faster

  9. Review Identify the four phases of the business cycle. How does the ripple effect impact the economy?

  10. Eras that Changed the Economy The Cyber Era, 1995 – present. The internet has changed business and consumer behaviors. Business is done anywhere in the world, 24 hours a day. How has the Internet changed the way people do business?

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