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Vocabulary

Vocabulary. Expansion- The economy is steadily growing, employment & production are increasing and people are spending more. Peak- Production, employment, spending, & wages are at it’s highest point.

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Vocabulary

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  1. Vocabulary • Expansion- The economy is steadily growing, employment & production are increasing and people are spending more. • Peak- Production, employment, spending, & wages are at it’s highest point. • Contraction- The economy is starting to decline, interest rates rise, spending decreases, unemployment rises & production decreases • Trough- The economy is at it’s lowest point, high unemployment, falling stock prices, minimal production.

  2. GDP- Gross Domestic Product, measures the size of the economy • Capital Gain- A stock is worth more that when it was bought. • Dividend- % of corporation profits distributed to stockholders.

  3. review • HOW DOES THE GOVERNMENT USE TAXES TO REGULATE THE ECONOMY? • SUMMARIZE THE DIFFERENCE B/W REGRESSIVE AND PROGRESSIVE TAXES • HOW DOES GOVERNMENT SPENDING AFFECT THE ECONOMY? • IN WHAT 3 WAYS DOES THE FED CONDUCT MONETARY POLICY AND CONTROL THE AMOUNT OF MONEY IN CIRCULATION?

  4. Warm up? • What happens to the money supply when the FED raises the discount rate?

  5. The Business Cycle

  6. Examine Business Cycle

  7. The Business Cycle • The business cycle acts like a roller coaster and has 4 main parts: • Expansion: The steady ride up is characterized by a growing economy, more production, increased employment, people are able to spend more. • Peak: Expansion will reach the point at which production, wages, and employment are at it’s highest point (Full Employment).

  8. Unemployment

  9. 3. Contraction: Economy is starting to come back down and is characterized by falling production, high interest rates, declining profits, decreased demand, increased unemployment. • Recession: When the period of contraction lasts from 6-8 months. 4. Trough: Economy is at its lowest point. This period is characterized by high unemployment, low economic production, and falling stock prices. • Depression: If it continues to worsen or last an extended period of time

  10. What do you think? • What might the FED do during the contraction part of the business cycle? • Lower the reserve requirement, lower the discount rate or buy back Treasury Bonds

  11. Measuring the Economy • Economic Indicators • Facts and data that help track the business cycle. • Gross Domestic Product (GDP) • Total value of all goods/services produced in an economy • Per Capita GDP • Calculates the number of goods produced per person. • Preferred by economists because it indicates the standard of living • Level of economic prosperity at which people live • Consumer Price Index (CPI) • Monthly index that measures the prices of goods/services (inflation) • National Debt • How much money the Federal Government owes

  12. Fiscal Policy • Government spending and tax policies. • Taxes go up…people spend less • Taxes go down…people spend more

  13. Stock Market • New York Stock Exchange (Wall St.) • Buy or sell stock

  14. Two ways to earn profits: 1. Dividends: A % of the corporation profits that are distributed to the stockholders. 2. Capital Gain: Selling a stock at a higher price than when you bought it.

  15. GRAPHIC ORGANIZER

  16. EQ: EXPLAIN HOW THE FED MAY CONTROL THE MONEY SUPPLY DURING THE DIFFERENT PARTS OF THE BUSINESS CYCLE?

  17. reflection • Summarize the 4 main parts of the business cycle. • What might the FED do during the contraction part of the business cycle? • Summarize the 4 economic indicators that experts use to track the business cycle. • What are two ways to earn a profit by investing in the stock market?

  18. Closing ? What are the two ways a person can make money in the stock market? Capital gain- Sell stock for more than you bought it Dividend- Receive part of corporate profits based on how much stock you hold

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