The Business Cycle Measuring Economic Activity UNIT 1.04.
-
Upload
primrose-potter -
Category
Documents
-
view
217 -
download
1
Transcript of The Business Cycle Measuring Economic Activity UNIT 1.04.
![Page 1: The Business Cycle Measuring Economic Activity UNIT 1.04.](https://reader035.fdocuments.in/reader035/viewer/2022062802/56649e905503460f94b9462a/html5/thumbnails/1.jpg)
The Business Cycle
Measuring Economic Activity
UNIT 1.04
![Page 2: The Business Cycle Measuring Economic Activity UNIT 1.04.](https://reader035.fdocuments.in/reader035/viewer/2022062802/56649e905503460f94b9462a/html5/thumbnails/2.jpg)
Recurrent periods during which the nation’s economy moves in and out of recession and
recovery phases
Major ups and downs of economy
Short Term (2-3 years)
Long Term (50-60 years)
THE BUSINESS CYCLE
![Page 3: The Business Cycle Measuring Economic Activity UNIT 1.04.](https://reader035.fdocuments.in/reader035/viewer/2022062802/56649e905503460f94b9462a/html5/thumbnails/3.jpg)
Peaks
Growing economy
Increasing investor confidence
Anticipation of future price increases
BULL MARKET
![Page 4: The Business Cycle Measuring Economic Activity UNIT 1.04.](https://reader035.fdocuments.in/reader035/viewer/2022062802/56649e905503460f94b9462a/html5/thumbnails/4.jpg)
Troughs
General decline in the stock market over a period of time
Transition from high investor optimism to widespread investor fear and pessimism price decline of 20% or more over at least a two-month
period sometimes referred to as "The Heifer Market"
BEAR MARKET
![Page 5: The Business Cycle Measuring Economic Activity UNIT 1.04.](https://reader035.fdocuments.in/reader035/viewer/2022062802/56649e905503460f94b9462a/html5/thumbnails/5.jpg)
A phase of the business cycle where most people who want to work are working and businesses produce
goods & services in record numbers.
Economic Growth1945-1973
$200B in war bonds matured GI Bill financed well-educated work force Middle class swelled Increase in GDP and Productivity
PROSPERITY
![Page 6: The Business Cycle Measuring Economic Activity UNIT 1.04.](https://reader035.fdocuments.in/reader035/viewer/2022062802/56649e905503460f94b9462a/html5/thumbnails/6.jpg)
A period where demand begins to decline, businesses lower production of goods & services, unemployment
begins to rise, and GDP growth slows for several quarters
Reduced Economic Activity GDP negative for 2 or more quarters 1.5% rise in Unemployment in 12 months
Late 2000s Collapse of the housing market Bank failures High Unemployment Low Consumer Confidence Escalating Debt Inflation Rising gas and food prices
RECESSION
![Page 7: The Business Cycle Measuring Economic Activity UNIT 1.04.](https://reader035.fdocuments.in/reader035/viewer/2022062802/56649e905503460f94b9462a/html5/thumbnails/7.jpg)
A phase marked by high unemployment, weak sales of goods & services, and business failures
Sustained, long-term economic downturnLarge increases in UnemploymentReduced credit availabilityLarge number of bankruptciesDeflationBank failures
DEPRESSION
![Page 8: The Business Cycle Measuring Economic Activity UNIT 1.04.](https://reader035.fdocuments.in/reader035/viewer/2022062802/56649e905503460f94b9462a/html5/thumbnails/8.jpg)
1929 – late 1930sStock Market Crash October 29 th
“Black Tuesday”Massive Bank FailuresMillions lost jobsGlobal in scale
THE GREAT DEPRESSION
Economic Indicators United States
Great Britain
France
Germany
Industrial Production -46% -23% -24% -41%
Wholesale Prices -32% -33% -34% -29%
Foreign Trade -70% -60% -54% -61%
Unemployment +607% +129% +214%
+232%
![Page 9: The Business Cycle Measuring Economic Activity UNIT 1.04.](https://reader035.fdocuments.in/reader035/viewer/2022062802/56649e905503460f94b9462a/html5/thumbnails/9.jpg)
A phase of the business cycle in which unemployment begins to decrease, demand for goods & services
increases, and GDP begins to rise again
High levels of growth following a RecessionGovernment stimulus packages
RECOVERY
What phase is the US in now?
![Page 10: The Business Cycle Measuring Economic Activity UNIT 1.04.](https://reader035.fdocuments.in/reader035/viewer/2022062802/56649e905503460f94b9462a/html5/thumbnails/10.jpg)
Gross Domestic Product (GDP)
Inflation
Consumer Price Index (CPI)
Productivity
Unemployment
Debt
Consumer Confidence
ECONOMIC INDICATORS
![Page 11: The Business Cycle Measuring Economic Activity UNIT 1.04.](https://reader035.fdocuments.in/reader035/viewer/2022062802/56649e905503460f94b9462a/html5/thumbnails/11.jpg)
The total value of all final goods & services produced in a country in one year
GDP = private consumption + gross investment + government spending +(exports – imports)
Often reflects a country’s Standard of living
GROSS DOMESTIC PRODUCT
![Page 12: The Business Cycle Measuring Economic Activity UNIT 1.04.](https://reader035.fdocuments.in/reader035/viewer/2022062802/56649e905503460f94b9462a/html5/thumbnails/12.jpg)
Top 10 largest world economies
Trading Economics
STRENGTH OF US ECONOMY TO OTHER COUNTRIES
Gross Domestic Product in $ trillion
World Rank
Country GDP
1 United States 17.418
2 China 10.380
3 Japan 4.616
4 Germany 3.859
5 United Kingdom 2.945
6 France 2.846
7 Brazil 2.353
8 Italy 2.147
9 India 2.049
10 Russia 1.857
![Page 13: The Business Cycle Measuring Economic Activity UNIT 1.04.](https://reader035.fdocuments.in/reader035/viewer/2022062802/56649e905503460f94b9462a/html5/thumbnails/13.jpg)
An increase in the general price level
When prices increase, each unit of currency buys fewer goods & services
Caused by excessive growth of the money supply
INFLATION
![Page 14: The Business Cycle Measuring Economic Activity UNIT 1.04.](https://reader035.fdocuments.in/reader035/viewer/2022062802/56649e905503460f94b9462a/html5/thumbnails/14.jpg)
Shows change in the average prices of goods & services bought by consumers over a period of time
Related to inflationShows how much
your money can buy
CONSUMER PRICE INDEX
![Page 15: The Business Cycle Measuring Economic Activity UNIT 1.04.](https://reader035.fdocuments.in/reader035/viewer/2022062802/56649e905503460f94b9462a/html5/thumbnails/15.jpg)
The quantity of a good an average worker produces in an hour
Measure of output from a production processGDP per hour worked
PRODUCTIVITY
![Page 16: The Business Cycle Measuring Economic Activity UNIT 1.04.](https://reader035.fdocuments.in/reader035/viewer/2022062802/56649e905503460f94b9462a/html5/thumbnails/16.jpg)
State of being without paid work, though willing and able to work and actively seeking work
Proportion of labor force that is without paid work
UNEMPLOYMENT
09/20155.1%
![Page 17: The Business Cycle Measuring Economic Activity UNIT 1.04.](https://reader035.fdocuments.in/reader035/viewer/2022062802/56649e905503460f94b9462a/html5/thumbnails/17.jpg)
money borrowed by the federal government of the US at any one time through the issue of securities by the
Treasury and other federal government agencies
Deficit – the diff erence between the total amount spent by Congress and the amount received by the IRS Was $17.7T last year, this year it’s $18.4 TRILLION US National Debt Clock
Surplus – revenues exceed spendingBalanced Budget – revenues =
spending President Clinton, 1998-2001 ?
DEBT