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The Macroeconomy : Business Cycle and GDP

The Macroeconomy : Business Cycle and GDP. Economics Mr. Odren. The Business Cycle. The Economy moves from periods of growth to periods of contraction. This is known as the Business Cycle The Business Cycle is just like a rollercoaster Highs, lows, ups, downs, etc….

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The Macroeconomy : Business Cycle and GDP

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  1. The Macroeconomy: Business Cycle and GDP Economics Mr. Odren

  2. The Business Cycle • The Economy moves from periods of growth to periods of contraction. • This is known as the Business Cycle • The Business Cycle is just like a rollercoaster • Highs, lows, ups, downs, etc…

  3. 4 Parts to the Business Cycle • Expansion – period of economic growth - People have jobs, consumers are spending money • Peak – the height of an economy’s growth. Growth has stopped. • Contraction – also known as a Recession - Following a Peak, a period of economic decline - People are losing jobs, consumers stop spending money 4. Trough – the lowest point of an economic contraction

  4. Related Terms • Depression - When a recession lasts longer than 18 months. • Unemployment rate greater than 12%

  5. Gross Domestic Product • The total value of ALL goods and services produced within a country’s borders in one year…. • In 2011, the GDP of the U.S.A. was…. 15,000,000,900,000 15.09 Trillion

  6. GDP-What does it indicate? • GDP indicates the strength of a country’s economy and standard of living…. • Higher GDP means citizens of that country are “doing” well….have jobs, money, in good health, etc….

  7. What’s not counted in GDP • Non-Market Activities - goods/services that people make/do for themselves - ex. Mowing your lawn • Black Market- buying/selling of goods/services illegally – not paying taxes to the government for the purchase of the good/service - ex. – bootleg movies

  8. Is it counted in GDP? 1. Mr. Odrenpaying a student to mow the lawn at his house 2. Mr. Odren paying a lawn-care business to mow the lawn at his house 3. Mr. Odrencooking a spaghetti dinner for his girlfriend. 4. Mr. Odren taking his girlfriend out to Hotel DuPontfor a fancy dinner 5. Mr. Odrenpaying a student to baby-sit his five kids while he takes his girlfriends to the movies 6. Buying books from Amazon. 7. Buying bootleg movies from “Charlie” ‘round the way. 8. Selling home-grown vegetables to your neighbor 9. Buying organically grown vegetables from the grocery store 10. Buying clothes from Polo Outlet.

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