Economics Unit Three -...

Economics Unit Three

Macroeconomics

Friday, September 8th

• Happy Friday! Calm before the storm…

• Sitting in new groups today:

• First students select which section to sit in

• Then everyone else finds them & sits in that section

• Our Opener today will be a Unit 3 Pretest

• Low/no stress – do your best, does not count toward your grade!

Group 1AlbertoZaionnaGrantElizabethJabariOmar

Group 2EdgarJoseKahlialEmmanualOmarAngelFavioKodou

Group 3GraceKrisBrookeDestinyDwightDaveonTamiaJerome

Group 4Ke’ShaunMa’tekaAlondraPedroBriannaJenniferTarndeep

Unit 3 PretestPlease clear your desk – all you need is a pencil

We’ll be taking the Pretest with:1.Zipgrade bubble sheet then…2.Hand held clickers

When you’re done just raise your hand and I’ll collect your materials

Remember ‘Test Mode’:• No electronics• No talking• No squawking• No walking• No gawking!

Class Updates

• Unit 2 Test scores are in Synergy!• Congratulations to everyone who did GREAT!

Students Needing to Make-up Their Unit 2 Test

AlbertoGracePedroElizabethOmarAngelDestiny

Students Who Qualify for Test Corrections/Test Retakes

Zaionna JabariEdgar FavioJose JeromeDaveonGrant Come to Ma’teka Tutoring NextKodou Tue & Th!!Brianna

Class Updates

Econ Budget Project

• Grades are all updated• Remember:

• Your next due date if Friday, September 15th –Phase 4 & 5

• We will have one computer lab day next week, but you should get started ASAP!

• Read the Cover Note and come to tutoring if you need help!

• Final due date is Monday, October 2nd (our first Monday after Fall Break)

Class Updates

EverFi

• All grades have been input in Synergy• Remember – you can go back and retake tests until you get

100%!• Next module due Monday!

Unit of Study Completed By Possible Points Points Earned

1. Savings 8/7/17 50

1. Banking 8/28/17 50

1. Payment Types 9/5/17 50

1. Credit Scores 9/11/17 50

1. Financing Higher Education 9/25/17 50

1. Renting vs. Owning 8/21/17 50

1. Insurance & Taxes 8/14/17 50

1. Consumer Protection 9/18/17 50

1. Investing 10/2/17 50

Progress Reports

Progress Reports• Gives you the details you need to know

exactly what you can do to help your grade.

• Get it signed by your caregiver (and yourself) – bring it back by Wednesday for 25 bonus points!

USA Test PrepIf your name is listed, please take out your phone and create a USA Test Prep account.

Following are the steps:1. Open a web browser2. Go to USA Test Prep.com3. Click the orange login icon on the upper right hand side of webpage4. Click on Create an Account

5. Enter School Code: Pebblebrook6. Enter Initial Password: stu12237. Complete the account setup process and let me know you’re done –

thanks!8. Remember your sign-on & password

Wednesday, September 13th

Welcome back after Hurricane Irma!Hope everyone weathered the storm okay.

As you come in, please:• Get a Vocabulary Exploration off the front table

and begin as soon as you find your seat.• Seating – back to quads

– but different quad-mates!• Ask if you can’t figure it out.

• Also, time to turn in your signed Progress Reports!

• Hold on to the Progress Report – it’s your Action Plan when you come to tutoring!!

Congratulations Cookies!

We need to celebrate our successes, sooo…

Congratulations to the following students for making a B on their Unit 2 Test:

KrisKe’ShaunAlondraEmmanuelTarndeepAngelAlbertoJennifer

Class UpdatesImportant Upcoming Dates:

• EverFi• Module #5 due the past Monday, scores are

in Synergy• Module #6 will be due next Monday!

• This Friday• School Progress Reports go home (homeroom

at the end of the day on Friday)• Econ Budget Project – Phase 4 and Phase 5

due – we’ll talk more about this tomorrow• Friday, September 22nd

• Unit 3 Test

Class UpdatesImportant Upcoming Dates:

• Week of September 25th

• Fall Break!!• Monday, October 2nd (1st day back after Fall Break)

• Econ Budget Project – Final Due Date!• Friday, October 6th

• Departmental Final (5% of your grade)• ALL Econ make-up work due – no exceptions!

• New news on Milestones Test• State DOE says we have to take Milestones test in

December – exact date TBD• We still need to switch to Government on October 9th

• Sooo we’ll be trying to keep Economics fresh in your mind while we continue with Government…stay tuned for more details later!

Unit 3 Revised TimingWhile we all enjoyed our Irma Days off, we still need to take our Unit 3 Macroeconomics summative test by Friday, September 22nd

Following is our Action Plan:

Date Concept

Today Gross Domestic Product

Unit Study Guide – complete each day

Thursday, 9/14 Unemployment

Friday, 9/15 Computer Lab Day

NearPod lesson on inflation

Econ Budget Project – Phase 4 & 5 due

Monday, 9/18 Business Cycle

Tuesday, 919 Monetary Policy/Federal Reserve

Wednesday, 9/20 Fiscal Policy/Congress

Thursday, 9/21 Review Day

Friday, 9/22 Computer Lab Day

Unit 3 Test Day

Unit 3 - MacroeconomicsTrying some new instructional strategies!

Good News• Less PowerPoints and me talking!• More YOU doing things, exploring concepts, teaching each

other and yourselves

Not-So-Good News• Attendance is even MORE important! Your only way to get the

information you need is by being here! There’s no other way to deliver the information with these new strategies.

Keys to Success• Be in class every day!• Using our time effectively – don’t waste a minute!• Stay on task, follow instructions so that you can make the

connections and learn what you need to learn to succeed!• Stay organized – keep putting all your papers in your 3-ring

notebook – that way you have everything you need to study

Today’s Learning Standard

SSEMA1 Illustrate the means by which economic activity is measured. a. Identify and describe the macroeconomic goals of steady

economic growth, stable prices, and full employment. b. Define Gross Domestic Product (GDP) as the sum of Consumer

Spending, Investment, Government Spending, and Net Exports (output expenditure model).

c. Define unemployment rate, Consumer Price Index (CPI), inflation, real GDP, aggregate supply and aggregate demand and explain how each is used to evaluate the macroeconomic goals from SSEMA1a.

d. Give examples of who benefits and who loses from unanticipated inflation.

e. Identify seasonal, structural, cyclical, and frictional unemployment.

f. Define the stages of the business cycle, including: peak, contraction, trough, recovery/expansion as well as recession and

depression.

What do you think would be

good goals for our economy?

Economic Freedom• Consumers and producers make their own economic decisions

• Choose their own occupations, employers, and uses for their money

• Choose what, where, and how to produce

Economic Efficiency• Use scarce resources well and not wasteful

Economic Equity/Equality

• Equal pay for equal work

• People are fair in both their purchases and sales

Economic Security

• Protection from adverse events such as layoffs and illnesses

• Social Security

Full Employment• Provide as many jobs as possible

Price Stability• Prices do not go up or down too much, too often

• Inflation – general rise in prices

• Deflation – general fall in prices (dollar worth less)

Economic Growth• More jobs means more money for people

Macroeconomics

Macroeconomics gives us a overall view of

economic activity

Macroeconomics is the study of the whole

economy together – the aggregated (everything

added up) spending, saving, and investing decisions

of all consumers and businesses

These factors together – households, businesses,

government, and net exports – describe the health

of the economy as a whole!

Key Economic Indicators

The health of the economy and the “big picture” of

economics is measured in several ways

These include:

Gross Domestic Product (GDP)

The Consumer Price Index (CPI)

This is a measure of the rate of inflation

Unemployment

Let’s think about it…

Gross

Not gross as in…

But gross as in…

Domestic

As in homeland

Product

As in everything

added together

adjective

(of income, profit, or interest) without

deduction of tax or other

contributions; total.

"the gross amount of the gift was

$1,000"

•adverb

1.1.

without tax or other contributions

having been deducted.

verb

1.1.

produce or earn (an amount of

money) as gross profit or income.

"the film went on to gross $8 million

in the U.S“


To compare our system with other countries’

systems, and to compare the strength of our

own economy year to year, economists use

something called the

Gross Domestic Product (or GDP),

which is the total dollar value of

all final goods and services

produced within a country during

one calendar year.

Final Goods?? Final goods are what we buy!

Need to be aware that a lot goes into

making final goods:

Intermediate goods

Raw materials (from planet Earth)

Example:

Final Intermediate Raw

Good Good Materials

Lasagna Noodles Wheat, flour, water

Tomato Sauce Tomatoes, water

Meatballs Beef, spices

Final Goods vs. Intermediate &

Raw Materials

Let’s practice!

Work with a neighbor to list the ingredients

and then sort them by whether they’re

intermediate goods or raw materials.


GDP is measured by assessing the total expenditures

(spending) of four different economic sectors:

1. Consumers (C) – Consumer Spending

2. Government (G) – Government Spending

3. Investment (I) – Investments from Industry

4. Net Exports (NX) – Exports Minus Imports

Gross Domestic Product

Famous Economic Formula

GDP= C+G +I+(X-M)

C= Personal consumption expenditures

(consumer spending).

Includes

durable goods: a lifetime of more than one

year, and

non-durable goods: a lifetime of less than

one year, and services.

Durable vs. Non-Durable Goods

G = Government Purchases

The dollar amount that federal, state, and

local governments spend on items

IE: highways, education, defense, etc.

Government Purchases

Levels of Spending

Federal/National

State

City

I = Capital Investment

Total value of all capital goods investment/purchases in a given nation during one year.

Fixed investment: Buildings, machinery, equipment

Inventory investment: raw materials, intermediate goods, final goods

Investment

Fixed Investment Inventory Investment

Raw Materials

Intermediate Goods

Finished Goods

Net Exports The reason we subtract our imports from our exports is

this:

Exports - The money other countries spend on our

exports adds value to our economy

Imports - The money we spend on goods imported

from other countries takes money out of our

economy

So, the net export

expenditure is

calculated only when

the transactions

add value to our

economy!

Exports vs. Imports Goods & services

made in our own

country

Other countries buy

them & add to our

economy

Goods & services

made in other

countries

When we buy other

countries’ goods &

services it does NOT

add to our economy

They use only products produced in the current year. This would exclude things bought at yard sales.

Which of the following was used in the calculation of the GDP in 1999?

A. A car manufactured in 1998 but sold in 1999.

B. A used 1993 Toyota that was sold to Ms. Simpson in Memphis in 1999.

C. A Ford F150 produced in 1999 but sold in 2000.

How Economists Calculate the GDP:

The answer is C again!


They use only items produced within

national borders.

Would this include or exclude

Coca-Cola (a U.S. company)

produced at a plant in Russia?

Exclude

GDP: Is a measure of the health or

strength of our economy

Analyzing GDP – What Does it Mean?!?

If the nation’s GDP increases over time, you can tell that the economy is growing!

That’s a good thing!!

To get an accurate measurement, the calculation depends on two more factors:

Real GDP: the GDP of a nation adjusted for inflation

Nominal GDP: the GDP of a nation beforeaccounting for inflation

So, a nation’s rate of growth is the percentage change

in its real GDP over time

GDP does NOT include: value of used products

value of volunteer work

purely financial transactions

value of intermediary goods

Transfer of assets

Value of non-market activities (DIY)

Underground economies (anything not

reported to the government)

Economic Lowdown - GDP

https://www.youtube.com/watch?v=1Il5IQHcYP8

GDP Jigsaw In your quad each of you will become

an ‘expert’ on one component of Gross

Domestic Product (GDP)

1. Get your GDP assignment and your GDP

Graphic Organizer,

2. Read your info card & complete your

graphic organizer with the info provided

3. Then, when instructed, all the quads’

‘experts’ will get together for additional

research and brainstorming!

GDP JigsawMeetings of Like-Minded ‘Experts’!

Within your expertise (C, I, G, NX), meet

with your fellow experts to:

Help fill any info gaps on your ‘Experts’ G.O.

Study your Info Poster for additional info and

add it to your G.O.

Brainstorm specific examples of what’s included

in your GDP component (‘Experts’ need five).

Get ready to ‘teach’ your quad-mates about

your area of expertise!

GDP JigsawMeeting of Quad-Sperts (Quad Experts)!

Now that you’re each Brainiacs on your

area of expertise it’s time to share your

knowledge!

Each ‘Expert’ teaches their quad-mates about

their GDP component & helps them complete

their G.O. (5 min/component)

Then you’ll rotate your G.O. to the quad-mate

to your right to add an additional new example

of that component to your G.O..

Keep rotating G.O.s until everyone’s added a

new example to each component to make your

G.O. 100% perfect and completed!

Thursday, September 14th

Good afternoon!

As you enter, please sit in the same

seats you were in yesterday and pick up

a Vocab Exploration off the front table

and complete it.

Class Updates Last call for signed Progress Reports!

25 bonus points!

Hold on to your Progress Report – this will be

your Action Plan for improving your grade!

TutoringUnfortunately a last minute social

studies department meeting this

afternoon is going to prevent me from

doing tutoring this afternoon.

Definitely will have tutoring next

Tuesday and Thursday

Given the fact we’re so short on time,

would anyone like to have tutoring on

Monday afternoon, too?

Econ Budget ProjectPhase 4 and Phase 5 due tomorrow

Let’s take a look at exactly what you

need to do:

By now you should already have:

Your disposable income

Your housing and transportation costs

subtracted from your disposable income

Some money left for…

Variable costs!

We learned yesterday that variable costs ‘vary

based on how much you use (i.e. opposite of

fixed costs)

Phase 4 -Variable Costs

Phase 4 - Variable CostsLet’s simplify and lower the stress level!

Phase 5 – Debt Obligations

You have to take care of your debt obligations!• For some of you this is easy• For others it may be hard

• You may have to go back to your food, housing and transportation costs to cut back so you can live within your disposable income

So where do I find it?

On your job and situation description

EBP Budget Before you turn in your EBP

tomorrow you need to

balance your budget (i.e. live

within your disposable income)

1. Add up all your costs (housing,

transportation, variable costs & debt obligations)

If your cost total is equal or less than

your disposable income

…congratulations! You’re in great

shape!

If your total costs are MORE than your

disposable income …

2. You need to go cut costs

somewhere so that your total costs are LESS than your disposable

income!

Budget Activity

Monthly Annual

P Income

H Gross Income

A Fed. Witholding

S State Witholding

E F.I.C.A.

2 Disposable Income

Expenses

P Housing

H Renters Insurance

A Household supplies

S Food

E Electricity

Water

3 Natural Gas

Cable TV

Internet

Auto Payment

Auto Insurance

Auto Maintenance

Gasoline

P Cell Phone

H Household Items

A Personal Care Items

S Clothing

E Entertainment

4 Electricity

P Investment

H Savings

A Miscellaneous

S

5

Total Expenses 0 0

YOUR TOTAL EXPENSES MUST EQUAL YOUR DISPOSABLE INCOME

Tomorrow…

We have a homeroom for Progress

Reports which will cut our 4th block short

We lost two days to Hurricane Irma…

Tomorrow…

We’ll be meeting in the Media Center

Computer Lab tomorrow

Come in calmly, quietly and find a PC

You’ll be completing a NearPod.com

lesson on inflation and Consumer Price

Index (CPI) – this will include:

Online activities

Completing Guided Notes

Only When You’re Done… When you’re done with your NearPod lesson I

will be able to see it on my Teacher screen

Only when I give you a thumbs-up can you

begin working on your Econ Budget Project

If anyone tries to work on their EBP before

completing their NearPod lesson:

You will waive your right to turn in your EBP until our

final due date (10/2) and have to live with a zero

until then.

You will also have 100 points deducted from your

EBP grade.

What did we learn yesterday?GDP is the total dollar value of all final goods and services

produced within a country during one calendar year.

Formula

GDP = C + G + I + NX

Two Kinds

Nominal and Real

Inflation Effect

GDP - Fed Reserve of St. Louis

https://www.youtube.com/watch?v=1Il5IQHcYP8


Which of these would be counted in the

GDP?

A. A tree cut by a woodcutter who sells it to a

lumber yard.

B. The lumber bought by the lumber yard who

then sells it to a furniture manufacturer.

C. A table made by the manufacturer now sold

to a couple in Detroit, Michigan.

The answer is C

Checkpoint Questions Services such as

mowing the lawn or a

doctor’s visit, fall under

consumption

expenditures as a:

a. Durable good

b. Fixed investment

c. Non-durable good

d. Inventory

investment

At the end of the year, a

bike manufacturing firm

finds that its inventories

of bikes are $15,000

above the amounts of its

inventories last year.

Where would this be

counted in the GDP?

a. Consumption

b. Investment

c. Net exports

d. Government

purchases

Focus #1 – Measuring Economic Activity The student will illustrate the means by which economic

activity is measured

Explain that overall levels of income, employment, and prices are determined by the spending and production decisions of households, businesses, government, and net exports

Define Gross Domestic Product (GDP), economic growth, unemployment, Consumer Price Index (CPI), inflation, stagflation, and aggregate supply and aggregate demand.

Explain how economic growth, inflation, and unemployment are calculated.

Identify structural, cyclical, and frictional unemployment

Define the stages of the business cycle, as well as recession and depression.

Our Economic Health Measures

Gross Domestic Product Measures a country’s output or productivity

Unemployment Measures how much of our productive resources

(i.e. people!) are being used productively

Tomorrow we’ll look at inflation and the

Consumer Price Index. http://www.investopedia.com/terms/u/unemployment.asp

http://www.investopedia.com/terms/u/unemployment.asp

Unemployment

To again monitor the health of our economy,

economists measure the Unemployment Rate.

Each month, they survey certain Americans to

find out their employment status.

The U.S. Government defines “employed” as

people 16 and older meeting one or more of

the following criteria.

Criteria to be considered “Employed”

1. Working for pay or profit for 1 or more hours

this week.

2. Working without pay in a family business 15

or more hours.

3. Having a job, but being ABSENT due to

illness, weather, vacation, etc.

The U.S. Government defines

“Unemployed" as:

1. NOT meeting any of the criteria above

AND

2. ACTIVELY looking for work during the past 4 weeks.

The most closely watched and highly publicized labor force

statistic is

the UNEMPLOYMENT RATE=the percentage of people in

the civilian labor force who are UNEMPLOYED.

Unemployment

rate

unemployed

labor forcex 100=

Measuring Unemployment

Why is there Unemployment? In the end, unemployment depends on supply and

demand – the supply of able workers and the

demand by businesses for those employees

Some, but not all, unemployment is the result of a

downturn in the economy – a change in supply or

demand

Economists classify four different types of

unemployment

4 Types of Unemployment

Structural

Cyclical

Frictional

Seasonal

STRUCTURAL Unemployment

Unemployment that occurs as a result of

changes in technology, consumer

preferences, or in the way the economy

is “STRUCTURED.”

EX: Many TV repairmen had to find new

work as televisions are now built with

transistors instead of tubes.

CYCLICAL Unemployment

This unemployment results from contractions in the economy.

This type of unemployment HARMS the economy more than any other types of unemployment. During the Great Depression, the

unemployment rate reached an all time high of about 25%.

As recently as 2009 and 2010, the unemployment rate reached 10.2%.

FRICTIONAL Unemployment

People who have decided to leave one

job and LOOK for another typically

better job.

Also, new entrants and re-entrants into

the LABOR FORCE.

Economists consider frictional

unemployment as a NORMAL part of a

healthy and changing ECONOMY.

SEASONAL Unemployment

This predictable unemployment

fluctuates as a result of HOLIDAYS, school

breaks, and industry PRODUCTION

schedules.

Checkpoint Questions Joe has recently lost his job

because the factory where he

works has moved its

operations to China. Joe still

wants to work but he realizes

that if he wants to get another

job, he will have to learn how

to work with new technology.

This is an example of…

a. Cyclical unemployment

b. Structural unemployment

c. Frictional unemployment

d. Seasonal unemployment

Toyota shuts down all of its

American factories as it

continues to cut costs to

cover third quarter losses.

What type of

unemployment is

occurring?

Cyclical unemployment

Structural

unemployment

Frictional

unemployment

Seasonal

unemployment

Unemployment Stand & Sort Each of you will be given a descriptor

strip:

Read it and decide which type of

unemployment it describes

Then go tape it under the correct

unemployment type on our anchor chart.

We’ll review and discuss in a moment.

I Spy Unemployment!NOW we’re going to work with our

Quad-Mates to identify different types

of unemployment that can be found at

several local employers.

Each Quad will receive a different

company

Brainstorm together and write down at

least one example of each type of

unemployment.

Your examples should include a complete

description of the job/employee involved and

why it demonstrates that type of unemployment

Friday, September 15th

In Media Center Computer Lab

Inflation and CPI lesson delivery via

NearPod.com

Consumer Price Index The Consumer Price Index (CPI) is a measure of the

change in prices in an economy

Economists add up the total price of a “market

basket” of typical items bought by the average

family in a month

Then, they compare the total price of these goods

to the total price of the same items during a base

period (or previous year) by dividing the total by

the base

Then, they multiply the result by 100 to have an

index figure for comparison purposes

CPI = cost of today’s market basket

cost of a market basket in previous timeX 100

Let’s Look at an Example…

Let’s say that in 2006, a year that we would

like to serve as our base year, the market

basket cost $960

Then, we measure the same goods again in

2007 and find that they cost $1000

So, it works out like this:

CPI = 1000

960

CPI = 1.04 X 100

CPI = 104

X 100Remember, this number is an index figure. By itself, it doesn’t tell us much. We compare it to 100 (the base number integer that is always used) to figure out the percentage change!

Calculating Percentage Change

So, when we compare to our base integer of

100, we see that there has been a 4%

increase in prices:

We end up with 4/100, or 4%

If in this same year, GDP rose by only 4%, then we

know that there was no real growth – the change

was only due to inflation

However, if it grew by more than 4%, then the

economy did actually grow!

104 – 100

100

CPI Index

from

calculation

Base CPI integer that

is always used

Inflation and Growth

On the other hand, if prices increase but the

economy does not grow, a condition called

stagflation occurs. Stagflation is when there is

high inflation, the economic growth rate

slows and unemployment remains high.

Inflation and Growth

High inflation hurts wage earners because the

money they make is now worth less

Some businesses may offer cost-of-living

adjustments for their employees to balance

out the effects of inflation

Monday, September 18th

Good afternoon!

As you enter, please pick up today’s

Vocabulary Exploration and complete it

Remember to answer any questions at the

end!

I’ll be handing back your Econ Budget

Projects. All grades have been updated in

Synergy.

Next due date is your final one on October 2nd.

Class UpdatesReminders:

Unit 3 Study Guides – you’re supposed to

be completing each day as we go through

unit!

Unit 3 Test is this Friday!

All Unit 3 Papers due on Friday

Extra tutoring time available this week –

3:40 – 4:30

Today

Tomorrow

Thursday


SSEMA1 The student will illustrate the means by which

economic activity is measuredExplain that overall levels of income, employment, and prices are

determined by the spending and production decisions of

households, businesses, government, and net exports

• Define Gross Domestic Product (GDP), economic growth, unemployment, Consumer Price Index (CPI), inflation, stagflation,

and aggregate supply and aggregate demand.

• Explain how economic growth, inflation, and unemployment are

calculated.

• Identify structural, cyclical, and frictional unemployment

• Define the stages of the business cycle, as well as recession and

depression.• Describe the difference between the national debt and

government deficits

What Have We Learned So Far?

• GDP

• Definition The total dollar value of all final goods and services produced within a country during one calendar year.

• Formula

• C + G + I + NX = GDP

• What does it measure?• Output, productivity, growth

• We measure spending, because if people are

buying then someone’s making it, too!


• Inflation• What is it?

• Measured by CPI – Consumer Price Index

• What is the ‘Market Basket’?

• Purchasing Power – how far does our money go?• When prices/inflation goes up – what happens to our

purchasing power? Purchasing Power goes down

• When prices go down – what happens to our purchasing

power? Purchasing Power goes up

• Winners and Losers• Winners – ex. Borrowers

• Losers – Lenders/Banks

• Inflation in 2 Minutes

https://www.youtube.com/watch?v=-pwincsv4E0


• Unemployment

• What’s ‘employed’?

• What defines ‘unemployment’?

• 4 types

• Frictional • normal, got the training, in between jobs

• Structural• Job is outsourced, replaced by tech, need

new training

• Cyclical • worst kind, downturn in overall economy

forces layoffs

• Seasonal• Part-time, holidays only, peak sales periods

Now That We Understand Our Measurements…

Measures Measurement Tool

Growth, Output, Productivity GDP

Unemployment Unemployment Rate

Inflation/Costs CPI

Now we need to see what the ‘measurements’ tell us!

By Understanding the Measurements We

Understand the Health of Our Economy

Economies ‘flow’ in a continuous rhythm of

good times and not-so-good times

What’s a Cycle?

Does a roller coaster car every go away from the tracks?

I hope not!

Does the roller coaster car keep going around & around?

Well, yeah!

So that’s how a roller coaster is like a cycle…it keeps going around and around!

A Business Cycle Keeps Going…

Round and round, but

with some ups and

downs!

Today we’re going to

look at those ups and

downs.

Business Cycles Fluctuations in Real GDP are referred to

as Business Cycles.

The duration and intensity of each

phase of the Business Cycle are not

always clear.

Business Cycles are typical of Market,

Capitalistic economies due to the free

nature of those economic systems https://www.youtube.com/watch?v=6XpXsC-yNHI

https://www.youtube.com/watch?v=T5seDnLO6M4

https://www.youtube.com/watch?v=6XpXsC-yNHI

https://www.youtube.com/watch?v=T5seDnLO6M4

Phases of the Business Cycle Expansion/Recovery

Peak

Contraction/Recession

Trough

Expansions are periods of increasing

Real GDP.

Unemployment decreases, businesses

expand, and Personal Consumption

increases.

As expansions continue, there tend to

be upward pressures on prices

(inflation) and interest rates.

Expansions

A Word About Interest Rates The amount of money charged as a fee

for lending money.

The price of borrowing money.

As interest rates rise LESS consumers will

borrow money IF they are WILLING and

ABLE

As interest rates fall MORE consumers

will borrow money IF they are WILLING

and ABLE

Peak

A peak is a period when the economy

starts to level off.

Businesses postpone new investments,

and consumer saving tends to increase.

Rising prices and interest rates tend to

restrict purchases and investments,

often leading to a Contraction.

Contraction

A Contraction is a period of declining Real

GDP.

Consumer spending decreases, and

unemployment increases as businesses layoff

workers and shorten work hours.

Interest rates and prices level off, and often

decline during long contractions.

Recession:

Six months of declining Real GDP

Depression:

Twelve months of declining Real GDP

coupled with at least 15%

unemployment.

Long Term Contractions

TroughA Trough is the bottom of a

Contraction. Lowest interest rates and

prices bring customers back to markets.

% Change in Real GDP

Contraction

Expansion

Peak

Trough

0%

Business Cycle Jigsaw In your quad each of you will become

an ‘expert’ on one component of the

Business Cycle.

In Your Quad1. Get your Business Cycle assignment and your

Business Cycle Graphic Organizer,

2. Read your info card & complete your graphic

organizer with the info provided

3. Then, when instructed, all the quads’ ‘experts’ will

get together for additional research and

brainstorming!

10 min.

Business Cycle Graphic

Organizer

Info Card

Info Card

+

Brainstorming

with Fellow

‘Experts’

Business Cycle JigsawMeetings of Like-Minded ‘Experts’!

Within your expertise (Peak, Contraction,

Trough & Expansion), meet with your fellow

experts to:

Expert Meetings

Each of you – read your bigger Info Sheets

Brainstorm specific examples of word clues and

potential ways to describe your B.C. Stage

Help fill any info gaps on your ‘Experts’ G.O.

Get ready to ‘teach’ your quad-mates about

your area of expertise!

15 min.

Business Cycle JigsawMeeting of Quad-Sperts (Quad Experts)!

Now that you’re each Brainiacs on your

area of expertise it’s time to share your

knowledge!

Back to Your Quads

Each ‘Expert’ teaches their quad-mates about

their portion of the Business Cycle & helps them

complete their G.O.

5 min/component = 20 total min

Wrap it Up! Let’s create a wall-size business cycle!

Let’s label our Business Cycle

Add Word Clues for each part

Add Potential Ways to Describe It!

Tuesday, September 19th

As you come in please:

Your Vocabulary Exploration off the Front Table

and complete it

Remember to answer the questions at the

bottom

Class Updates

• Tutoring – Today and Thursday

• Reminders:

• This Friday

• Unit 3 Test

• All Unit 3 papers are due

• Monday, October 2nd

• Final Due Date for Econ Budget Project

• Friday, October 6th

• Final Due Date for ALL Make-up Work

Class Updates

• Econ Budget Project• Phase 4

• Phone, clothing & entertainment

• Phase 5

• Debt Obligations

• Final Turn-In

• Clean, neat versions

• Explanations – for each budget item

• Presentation Folders - $0.75 if you’d like to buy

one!


• GDP

• Definition

• Formula

• CPI

• Inflation

• Unemployment

• 4 Types

• Business Cycle• 4 parts


SSEMA2 Explain the role and functions of the Federal Reserve System.

a. Explain the roles/functions of money as a medium of exchange, store

of value, and unit of account/standard of value.

b. Describe the organization of the Federal Reserve System (12 Districts,

Federal Open Market Committee (FOMC), and Board of Governors).

c. Define monetary policy.

d. Define the tools of monetary policy including reserve requirement,

discount rate, open market operations, and interest on reserves.

e. Describe how the Federal Reserve uses the tools of monetary policy

to promote its dual mandate of price stability and full employment,

and how those affect economic growth.

What is this used for?

Econ Talk – Medium of Exchange

What Should I Pay For This?

Econ Talk – Unit of Value

How do I save?

Econ Talk – Store of Value

What is the difference?

Functions of Money

Money is any good that is widely accepted in exchange of goods and

services, as well as payment of debts.

Three functions of money are:

1. Medium of exchange: Money can be used for buying and

selling goods and services. If there were no money, goods would have

to be exchanged through the process of barter (goods would be

traded for other goods in transactions arranged on the basis of mutual

need). Such arrangements are often difficult.

2. Unit of value: Money is the common standard for measuring

relative worth of goods and service.

3. Store of value: Money is the most liquid asset (Liquidity measures

how easily assets can be spent to buy goods and services). Money’s

value can be retained over time. It is a convenient way to store

wealth.

Money, Money, Money!As you have learned, the economy

operates around money Before 1913, hundreds of national banks

could print as much paper money as they wanted, as often as they wanted!

They could also loan out money when times were good, or refuse to loan money when times were bad

These practices made huge profits for bankers, but greatly hurt the economy as a whole!

So, the government created a solution…

The Federal Reserve System A special bank, referred to as The Federal

Reserve (“the Fed”), was established in 1913

to help control the money supply (or, the

amount of money) in the economy

These tasks are called monetary policy – or, the

regulation of the amount of money available in

the economy

The Fed does this in order to promote economic

growth and full employment to limit the impact of

inflation and recessions

These are called the “goals” of monetary

policy!

Other Fed Responsibilities Another huge task that the Fed is responsible

for is controlling what the banks can and

cannot do

They do this to make sure that banks are all playing

by the same rules!

The most important job is to tell the banks how

much of their money must be held in the form of

reserves

Reserves are money that the bank must keep in

its vault instead of loaning out for a profit!

Why do you think it’s important for banks to hold

some money as reserves?

Structure of the Fed

The Fed is often discussed as the nation’s central bank – but, it is actually a system

The Federal Reserve System is made up of 12different banks in various regions of the nation

Each of these banks is able to print paper money, called Federal Reserve Notes

The system as a whole is run by a Board of Governors, who are appointed by the U.S. President

The Chairman of the Federal Reserve is Janet Yellen

The monetary policy of the Fed is decided and enforced by the Federal Open Market Committee (FOMC)

Federal Reserve System

Tools of the Federal Reserve

The Federal Reserve has several ‘tools’ they

can use to help our economy:

1.Federal Open Market Committee

2.Reserve Requirements

3.Discount Rate

Federal Open Market Committee (FOMC)

Regulates the money supply by buying and

selling securities, or bonds

Securities or bonds are documents issued by the

government for which you pay a set price now, in

exchange for a higher fixed amount (called the

“face value”) later

When securities are bought and sold, this is called

an “open-market operation”

A bond usually “matures” – or can be exchanged

for its face value – in 5, 10, or 20 years

Federal Open Market Committee (FOMC)

When the economy is in a recession, the

Federal Reserve will try to stimulate consumer

demand by increasing the money supply

The money that it pays for these securities then

goes into the banking system, and thus, increases

the money supply to the public

When banks have more money to lend, they lower

their interest rates

Down the line, the point of the Fed’s actions are to

encourage economic growth!

Remember Inflation? Sometimes, though, the problem in the

economy is that it’s growing too fast

This leads to a rapid increase in prices, and could

lead to overproduction

Then, the Fed will sell bonds to the public, and

keep the money they pay for them as

reserves in their vaults

This lowers the money supply available to the

public in order to curb inflation and control

production rates (leads to higher interest rates)

So, the use of securities is a give and take!

Reserve RequirementsAnother tool of the Federal Reserve is

reserve requirements.

Reserve requirements are the amount of

consumer deposits that banks have to hold

in ‘reserve’ for an average amount of daily

withdrawals.

Acts as a protection from ‘runs on the

bank’

Our current reserve requirements are

10%.

Reserve Requirements If the Fed wants to increase the money

supply they can lower the discount rate

Banks have more money to lend out

If the Fed wants to decrease the money

supply they can increase the discount

rate

Banks have less money to lend out

One More Task… The Fed may also regulate the money supply

through the discount rate

The discount rate is the interest rate that the

Federal Reserve charges other banks to lend them

money

When the discount rate is high, banks don’t borrow

as much money and they charge higher interest to

the public (lower money supply)

When the discount rate is low, banks want to

borrow more money to make more profit on loans

(higher money supply)

Monetary PolicyGallery Walk

Calmly, quietly borrow a clipboard and

walk around the hallway to find all the

answers for your graphic organizer.

Functions of Money

Unit of value

Store of value

Medium of exchange

Characteristics of MoneyPortable

Durable

Divisible

Uniform

Limited

Acceptable

MoneyCredit Cards

Credit cards represent a loan. The card (or the

number) is simply a way to access a line of credit.

On the other hand, a debit card is a way to spend

checkable deposits, just like a paper check.

Buying Bonds

Increases money supply

Lowers Interest

Rates

Selling Bonds

Decreases money supply

Interest RatesGo Up

Structure of the Federal Reserve

Organization of the Federal Reserve

Wednesday, September 19th

Good afternoon!

As you come in, please get a

Vocabulary Exploration off the front

table and complete it!

Class Updates

• Tutoring – Thursday

• Reminders:

• This Friday

• Unit 3 Test






Class Updates



• Phase 5


• Final Turn-In




one!

A Quick Formative Let’s do a quick formative to see how

we’re tracking on what we’ve covered

so far

Just 10 questions

With bubble sheet & our handhelds

Unit Three Formative

Please clear your desk and shift into ‘Test Mode’• Remember:

• No electronics• No talking• No squawking (no disruptions)

• No walking (raise your hand & we’ll

come to you)

• No gawking (eyes on your own

paper)

Let’s Review!Monetary Policy

What is it?

Controlling the amount of money supply in an

economy to promote price stability &

employment

Who does it?

Federal Reserve Bank System

Word Clues

Monetary Policy = Money Supply in Economy

Federal Reserve

Tools They Use:

Let’s Review – Monetary Policy! Word Clues

Monetary Policy = Money Supply in Economy

Federal Reserve

Tools They Use: Federal Reserve

Monetary Policy

Tools

Ways They Can:

Increase Money Supply

Ways They Can:

Decrease Money Supply

FOMC – Open Market

Buying/Selling Govt Bonds

Buy Bonds(more money in the

economy)

Sell Bonds(less money in the

economy)

Reserve Requirement – How

much $$ banks have to

‘reserve’ for withdrawals

Lower Reserve

Requirement(banks can loan out

more money)

Increase Reserve

Requirement (banks has less money

for loans)

Discount Rate – interest rate

the Fed charges member

banks for loans

Lower Discount Rate(Cheaper to borrow

money)

Raise Discount Rate(more expensive to

borrow money)

Possible Scenario #1

Suzy Q deposits $1,000 into her bank savings account

Question

How much of Suzy Q’s money can the bank now

lend to others in exchange for earning interest.

Answer

10% - required reserve - $100

90% - available for new loans - $900


Overall economy in extended expansion phase and

close to ‘over-heating’.

Question

What can the Fed do to ‘cool down’ the economy

and avoid the Peak phase and moving into a

contraction?

Answer

Reduce the money supply by:• Selling bonds – consumers turn in their money in exchange

for a government bond or

• Raise the discount rate – increases the cost of borrowing• Raise the reserve requirement – banks have less money to

loan out


Overall economy in extended contraction phase

and needs to be ‘warmed-up’.

Question

What can the Fed do to ‘warm up’ or stimulate the

economy and help increase demand/spending?

Answer

Increase the money supply by:• Buy bonds – consumers turn in their government bonds in

exchange for money or

• Lower the discount rate – decreases the cost of borrowing

• Lower the reserve requirement – banks have more money to loan out


SSEMA3 Explain how the government uses fiscal policy to

promote price stability, full employment, and economic

growth. a. Define fiscal policy.

b. Explain the effect on the economy of the government’s taxing and spending decisions in promoting price stability,

full employment, and economic growth.

c. Explain how government budget deficits or surpluses

impact national debt.

What is Fiscal Policy?

Fiscal policy is the government’s attempt to

influence or stabilize the economy through

taxing and government spending

Fiscal Policy, think…

• Government as in Congress

• Only Congress can tax

• Only Congress can spend tax dollars

When I Say Government, I Mean…

Legislative Branch/Congress

is responsible for

government spending (with

Presidential approval)

Try Not To Get Confused!

Type Controlled By Tools

Fiscal Policy Government/Congress 1. Taxing

2. Spending

Monetary Policy Federal Reserve

Money Supply

1. Open Mkt

Operations

2. Reserve

Requirements

3. Discount Rate

Demand Side Policies Fiscal policies are designed to increase

employment by stimulating demand

How does the Government get involved?

The govt. is the only thing big enough to offset a downward spiraling economy

The govt. can undertake its own spending to offset the spending in other parts of the economy – like businesses

The government can also lower taxes to increase borrowing and push consumers to spend more

So, if business spending was down $50billion – the government might spend $10 billion building a dam, $20 billion in grants to fix neighborhoods, and $20 billion in other ways

This spending would offset the $50 billion that businesses did not spend

Or – instead of spending, the

government could just reduce taxes

giving consumers and businesses more

purchasing power

Supply Side Policies

Designed to stimulate output and lower unemployment by increasing production NOT by stimulating demand

The key goal here is to reduce the governments role in the economy Reducing federal agencies

Less government spending

Deregulating firms – allowing them to produce at full capacity

Measuring the Economy

Review: What other ways have we discussed that

measure economic health?


Unemployment (Unemployment Rate)

Inflation (CPI)

Many economists also measure the economy by

looking at the government’s budget

The government’s budget is based on how much

money it will spend compared to how much money it

will take in through taxes

What do you think is the goal of the budget?

The Deficit and Debt If the government spends more money than it takes

in for the year, it is operating under a budget deficit

This is more of a prediction – the idea that the

government will have less money in the end

If the government has a deficit, it needs to borrow

money to finance the difference – this is called the

national debt

It is all of the money that the government borrows

to make up for the extra money it spends!

Our National Debt – in real time

http://www.usdebtclock.org/#

http://www.usdebtclock.org/

The National Debt Like any borrower, the government must pay interest

on its debt

Today, a big chunk of the government’s tax

revenues go towards paying this interest (in other

words, taxes go towards paying for money that the

government has already spent)

Because money is going towards interest instead of

goods and services, these payments limit the growth

of the nation’s GDP

Thus, economists look at the deficit and debt to

continue measuring our economic health

Who Owes More??

China Owning USA

https://www.youtube.com/watch?v=MQfejG57LkA

https://www.youtube.com/watch?v=JlkLhVo3PbY

National Debt

Each time the government

borrows money it adds to the

national debt, the total

amount of money owed by the

federal government.

Is the sum of all past deficits

plus interest.

Government Deficits

When the government

spends more money in a

fiscal year than it has

brought in

National Deficit vs. National Debt

Deficit vs. Debt

Thursday, September 21st

Good afternoon!

As you enter, please:

Find your new seat, based on our new data

Then get a Macroeconomics Review

Crossword Puzzle and complete it with your

Quad-mates

Class Updates

• Tutoring – Today!

• Reminders:

• Tomorrow

• Unit 3 Test




• EverFi – Final Due Date



Class Updates



• Phase 5


• Final Turn-In




one!

• I have some change today!

Let’s Wrap This Up!

There’s one last concept you need to know and

then we’re going to practice!

Aggregate Demand & Supply

In individual markets, supply and

demand interact to establish prices. In

the nation as a whole, aggregated

supply and aggregated demand

interact to determine whether the

economy is growing or declining.

What is this??

What Does It Tell Us?

Supply and Demand in

Microeconomics

What’s the Difference??

A Lot Alike, A Little Different

How is Aggregate Supply and

Aggregate Demand Different (than Regular Supply and Demand)?

Main difference is that aggregate demand and

aggregate supply are plotted based on total

output, measured as GDP.

So…

Now Let’s Review…

Monetary Policy Vs. Fiscal Policy

Goals Goals

Steady Economic Growth Steady Economic Growth

Stable Prices Full Employment



Who’s in Control Who’s in Control

Federal Reserve Government/Congress

Day-to-Day most Important

is the FOMC



Tools to Use Tools to Use

#1 FOMC - Buying/Selling Bonds #1 Taxing

#2 Reserve Requirement #2 Spending

#3 Discount Rate

Now Let’s Review…Economic Needs Economic Needs

Warming Upin Contraction/ Recession

Cooling Downinflation high, nearing Peak

Warming Upin Contraction/ Recession

Cooling Downinflation high, nearing Peak

Econ Talk: Expansionary Econ Talk:

ContractionaryEcon Talk: Expansionary Econ Talk:

Contractionary

How To Do It?(Big Picture)

Increase money

supply


Decrease

money supply


Increase money

supply


Decrease

money supply

Talking Details #1

Buy Bonds Sell Bonds Lower Taxes Raise Taxes

Talking Details #2

Lower Reserve

Requirement

Increase Reserve

Requirement Increase spending Decrease

spending

Talking Details #3

Lower Discount

Rate Increase Discount

Rate

Let’s Practice!

With your Quad-Mates, answer the questions with

each scenario:

1. Read the scenario

2. Should the government use Fiscal Policy or

Monetary Policy?

3. Once you’ve figured that out… should the

government use expansionary or contractionary

policies?

4. Then list the expansionary or contractionary

policies the government should use.

Focus #3 Check Point If GDP is decreasing

and the

unemployment rate

is increasing, which

fiscal policy should

the government

MOST likely use?

a. Increase taxes

b. Decrease taxes

c. Increase bank

reserves

d. Decrease spending

If the inflation rate is

rising too fast, which

fiscal policy would

make the MOST

sense?

a. Increase taxes

b. Decrease taxes

c. Increase spending

d. Decrease bank

reserves

Fiscal vs. Monetary Policy

Focus #1 Check Point A recession is when:

Unemployment

decreases

Real GDP is increasing

The economy is in a

contraction for at least 6

months

Interest rates and prices

are on the increase

If aggregate demand

and real GDP are

beginning to fall and the

unemployment rate is

beginning to rise, what

conclusion can you

draw?

a. The economy is in an

expansion phase

b. The economy is facing a

downturn

c. The economy is in a

recovery

d. Aggregate supply is

increasing

Friday, September 22nd

Time to turn in your Unit 3 Papers!

• Calmly and quickly pull your papers out

• Make sure you have a cover page with your

name on it

• Please staple them and turn it in within 5 minutes

Kahoot!

Time to show what you know and win sweet prizes!

Pull out your smartphone and…

• Log in to a web browser

• Go to Kahootit.com

• Enter our session/game #

• Remember to make sure your game name

includes a recognizable name and is 100%

clean!


• GDP

• Definition

• Formula

• CPI

• Measures inflation• Current Market Basket Cost / Base Year Market Basket Cost x 100

• Unemployment• Four types

• Which is the most harmful?

• Monetary Policy

• Federal Reserve controls the supply of money

• Tools include:

• Open Market – buying and selling bonds/securities

• Discount Rate• Fiscal Policy

• Congress uses taxing and spending powers to help the economy

Unit 3 TestRemember!

No talking

No squawking (no disruptions)

No gawking (eyes on your own paper)

No walking (raise your hand & I’ll come to

you) – until all tests are turned in.

All multiple choice answers are to be bubbled

in on your Zipgrade answer sheet.

Economics Unit Three -...

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