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Economic Activity

Economic Activity. Economic Conditions Change. 2-2 Economic Conditions Change. Goal 1 Describe the four phases of the business cycle. Goal 2 Explain causes of inflation and deflation. Goal 3 Identify the importance of interest rates. THE BUSINESS CYCLE. Prosperity Recession

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Economic Activity

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  1. Economic Activity Economic Conditions Change

  2. 2-2 Economic Conditions Change Goal 1 Describe the four phases of the business cycle. Goal 2 Explain causes of inflation and deflation. Goal 3 Identify the importance of interest rates.

  3. THE BUSINESS CYCLE • Prosperity • Recession • Depression • Recovery

  4. CONSUMER PRICES • Inflation • Causes of inflation • Measuring inflation • Deflation

  5. INTEREST RATES • Types of interest rates • Changing interest rates

  6. How do interest rates affect business activities in our economy? • Interest rates can encourage or discourage borrowing and spending. • Lower interest rates allow consumers greater spending power, which increases demand, productivity, and employment. • Businesses often pass on the cost of higher interest rates to consumers.

  7. Other Measures of Business Activity Goal 1 Discuss investment activities that promote economic growth. Goal 2 Explain borrowing activities by government, business, and consumers. Goal 3 Describe future concerns of economic growth.

  8. INVESTMENT ACTIVITIES • Personal savings • The stock market • The bond market

  9. BORROWING • Government debt • Business debt • Consumer debt

  10. What is the cause of a budget deficit? • A budget deficit occurs when a government or organization spends more than it takes in.

  11. FUTURE ECONOMIC CHALLENGES • Emerging markets • Weak economies • Consumer preferences and behavior

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