Welcome C&E Students! Grab your handouts and settle in Roll Call Question: What would you rather have as a pet; a mini horse, a pygmy goat or a teacup pig? Mental Floss Vocab Great Depression Speculation The Crash Black Tuesday Federal Reserve Act of 1913 Monetary Policy Fiscal Policy Reserve requirement Discount Rate Loose Money Tight Money Objective Identify the economic indicators of the business cycle Questions 1. What is CPI? 2. How are GDP and GNP different? Bell Work Answers The Consumer Price Index determines inflation rate by tracking change in price of essential goods and services The Gross Domestic Product determines value of all goods and services produced within a countrys borders while the Gross National Product determines value of all goods and services produced by a country Reminders Unit 7 Test is Thursday! Unit 7.3 7.5 Quiz tomorrow Recovery is Every Tuesday, Wednesday, and Thursday If you have more than 10 absences you must recover these to pass this class!!! Start reviewing PowerSchool and turn in your missing assignments 7.5 Business Cycle and Government Intervention identify the economic indicators of the business cycle I. Phases in Business Cycle A.Peak- when GDP stops rising, the height of economic expansion B.Contraction- an economic decline marked by falling GDP, rising unemployment 1.Recession- prolonged contraction (6-18 months) 2.Depression- long and severe recession with high unemployment, low output C.Trough- economy at lowest point in economic contraction D.Expansion 1.Period of economic recovery and growth as measured by rise in GDP 2.Business prosperity, falling unemployment Lets draw it! Business Cycle Analysis Feel free to work with a partner Your group will look at several images and descriptions. You must determine what part of the business cycle it falls under Peak Contraction Trough Expansion Poster Board Challenge Draw and label the business cycle Place the pictures on the business cycle in the correct spot WITHOUT USING YOUR NOTES!!!! A: Rising house construction B: The number of job vacancies rises G: Rising quantity of mail C: Increasing hours of overtime D: Rising homelessness H: Slower delivery times K: Falling share prices E: Rising demand for steel M: Rising real income L: Rising lipstick sales F: More people use pawnbrokers I: Home delivered pizza becomes more popular J: Rising air traffic N. Rising car sales O: More rental housing available P: Growing mountain of unsold bricks Q: Fast food shops cut their prices T: The cost of shipping goods around the world starts to rise U: More skips start appearing on the streets V: Sales of milk chocolate start to decline X: Oil refineries report a reduction in stocks Y: Citizens Advice Bureau gets more callers W: Shops delivering lunchtime sandwiches to offices raise their prices R: Imports of sewing machines rise S: Increasing supply of credit Z: Rising government spending A: Rising house construction B: The number of job vacancies rises C: Increasing hours of overtime D: Rising homelessness E: Rising demand for steel F: More people use pawnbrokers G: Rising quantity of mail H: Slower delivery times I: Home delivered pizza becomes more popular J: Rising air traffic K: Falling share prices L: Rising lipstick sales M: Rising real income N. Rising car sales O: More rental housing available P: Growing mountain of unsold bricks Q: Fast food shops cut their prices R: Imports of sewing machines rise S: Increasing supply of credit T: The cost of shipping goods around the world starts to rise U: More skips start appearing on the streets V: Sales of milk chocolate start to decline W: Shops delivering lunchtime sandwiches to offices raise their prices X: Oil refineries report a reduction in stocks Y: Citizens Advice Bureau gets more callers Z: Rising government spending Place the number of the following scenarios in the correct place in the business cycle. Poster Board Challenge A.Economy is getting better B.Economy is at its highest point C.Economy is going down D.Economy is at its lowest point A B C D Poster Board Challenge A.Business is in full swing B.GDP is decreasing C.GDP is at its lowest point D.GDP is increasing A B C D Poster Board Challenge A.People are getting laid off B.Interest rates are high C.People are getting back to work D.Interest rates are low A B C D Poster Board Challenge A.Unemployment is increasing B.Unemployment is decreasing C.Unemployment is an all time high D.Unemployment is an all time low A B C D II. Economic Low Points A. The Great Depression deepest and longest-lasting economic downturn in the history of the Western world. 1. Signs of Trouble a. large gap between rich and poor b. large portion of Americans were going into debt to buy consumer goods 2. Other Causes a. Investing (1) stocks tripled in value (2). Climb encouraged speculation making investments with borrowed money (3). Unfortunately most speculators ended up losing all the borrowed money and then some b. The Crash (1). Black Tuesday (1929) huge sell off of all stocks that led to fear that all banks would fail (2). Massive amounts of people began emptying their bank accounts, caused banks to fail 3. Aftermath a. Falling prices led to deflation and eventually massive unemployment b. Large trade tariffs are placed on all foreign goods to protect domestic industry II. Creation of The Fed A.Federal Reserve Act of created the Federal Reserve 1.After getting off gold standard, needed federal bank to respond to economy 2.Purpose is to regulate/support banks, control money supply, and stabilize economic growth B.Operates mostly independently from the government C.Chairman, Board of Governors, 12 Districts A.Monetary Policy- actions The Fed takes to influence level of GDP (value of economic activity in the country) and rate of inflation B.Fiscal Policy the federal governments use of spending and taxation policies to affect our economy C.Reserve requirement- amount of money banks must keep in Fed banks as a reserve II. Monetary Policies D. Discount rate- cost for banks borrowing from the Fed 1.Reducing the rate- encourages banks to borrow more money so they lend more to other people 2.Increasing the rate- slows down economy by discouraging borrowing E. Fed Policies 1.Loose-money policy- reduce rates, lower reserve requirement, print currency= more money in economy 2.Tight-money policy- increase rates, raise reserve requirement= less money in the economy Inside the Fed We will be watching a film on the Federal Reserve You will complete a for this activity 3 things you learned 2 questions you still have questions about 1 interesting fact from the film https://www.youtube.com/watch?v=I2m3t 2Yr8Vg https://www.youtube.com/watch?v=I2m3t 2Yr8Vg Economics BINGO! Homework Find and print an article about inflation, deflation, monetary policy, or the Federal Reserve Underline/highlight any economics terms you know Circle any terms or concepts you dont understand Desk Work Read p and answer the following questions: 1.What does the Federal Reserve do? 2.How does monetary policy affect the economy? 3.What do you think the Fed is doing or should be doing to help our current economy? Welcome C&E Students! Grab todays handout and settle in Roll Call Question: Would you rather be a hamster the size of a Rhino or a Rhino the size of a hamster? Bell Work How can we identify the 4 phases of the business cycle? What were the main causes of the Great Depression? Bell Work Answers Peak height of economic expansion GDP stops rising Contraction falling GDP, rising unemployment Trough lowest point of contraction Expansion economic recovery and rising GDP People going into debt to by consumer goods, speculation in stock market and eventually the stock market crash Reminders Unit 7 Test is next Wednesday! Study Guide Recovery is Every Monday, Tuesday and Thursday If you have more than 10 absences you must recover these to pass this class!!! Start reviewing powerschool and turn in your missing assignments Extra credit due Next Wednesday!