1 / 20

Bell Ringer

Bell Ringer. What is the Business Cycle?. The Business Cycle. Recurrent swings in Real GDP Five Phases: Peak – temporary high of real GDP Contraction – decline in real GDP Decline for 2 consecutive quarters (6 months) economy in a recession

desireed
Télécharger la présentation

Bell Ringer

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Bell Ringer • What is the Business Cycle?

  2. The Business Cycle • Recurrent swings in Real GDP • Five Phases: • Peak – temporary high of real GDP • Contraction – decline in real GDP • Decline for 2 consecutive quarters (6 months) economy in a recession • Trough – low point of real GDP, just before it swings upward • Recovery– the period where real GDP is rising • Expansion – increases in real GDP beyond the recovery

  3. Economics Indicators • Real GDP • Measures the output of all final goods and services produced in the US in a given time period • Real GDP = (nominal GDP/Price Index) x100 • Inflation rate • Measures how rapidly the overall price level it changing in the US economy. • Inflation Rate = ((CPI lateryear - CPI earlieryear)/ CPI earlier year) x 100 • Unemployment rate • Measures the percentage of the US labor force that wishes to work, but are currently without jobs. • Unemployment Rate = unemployed persons/civilian labor force

  4. Unemployment Rate • Unemployment rate – the percentage of the civilian workforce that is unemployed Unemployment rate = • Employment rate – the percentage of the non-institutional adult civilian population that is employed • Unemployed – 16 years or older and actively looking for a job. Unemployed Persons Civilian Labor Force

  5. Unemployment Rate • Three Types of Unemployment: • Frictional • Temporary unemployment that occurs from a normal job search • Structural • Unemployment caused by changes in technology and the need for workers with different skills • Cyclical • Unemployment caused by an economic downturn

  6. Inflation Rate • Inflation is an increase in the average price of goods • Inflation rate is the percentage change in price levels from one time to another, usually month to month or year to year. • Demand-pull – inflation that occurs when demand for goods causes prices to rise • Cost-push – inflation that occurs when increases in the cost of inputs raises the prices of the final good or service.

  7. Inflation Rate • Effects of Inflation • Individuals on a Fixed Income • Income doesn’t change while prices do • Saving • Interest rate on accounts maybe less than inflation, causing money to devalue • Past decisions • Companies make decisions based on economic information • Hedging against Inflation • Attempts to lessen the affects of inflation • Deflation – a decrease in the price level • Major problem – when prices fall, they do not fall consistently for all goods and services

  8. Real GDP • GDP – The market value of final goods and services produced in the United States in a year. • GDP = C + I + G + NX • Real GDP – accounts for changes in quantity of goods and services, not changes in the prices of goods and services • Real GDP = (nominal GDP/Price Index) x100

  9. Business Cycle and Economic Indicators • Economic Indicators inform us of where the economy is on the Business Cycle • Leading indicator – proceeds the event • Tend to be quoted most often in news • stock prices, money supply, consumer expectations, average weekly hours worked • Coincident indicator – during the event • Lagging indicator – after the event

  10. What Causes the Business Cycle? • Money Supply (Monetary Policy) • Business Investment • Government Spending • Residential Construction • Politics (Fiscal Policy) • Innovation • Supply Shocks

  11. Bell Ringer • In which phase of the business cycle do you think the U.S. economy is currently in?

  12. Economic Growth • Absolute Real Economic Growth • An increase in real GDP from one period to the next • real GDP for 2011 = $13,299.1 billion • real GDP for 2012 = $13,593.2 billion • What was the absolute real economic growth between 2011 and 2012? • Per capita real economic Growth • An increase from one period to the next in per capita real GDP

  13. Rule of 72 • 72 / % Growth • Used to calculate how often our standard of living will double

  14. Real Growth and the PPF • What is the PPF? • What causes the PPF to shift outward? • Pgs. 331 – 334 • Natural Resources • Labor • Capital • Human Capital • Technological Advances • Incentives

  15. Cost of Growth • What are some of the possible negatives associated with economic growth? • Cost of Economic Growth • Economics Growth v. Future Availability of Resources

  16. Economics Indicators • Economics Forecasters, Inc. • You will learn more about the three main macroeconomic indicators • Real GDP • Inflation Rate (Change in CPI) • Unemployment Rate • You and your group will create a report about the current economic conditions in the US.

  17. Bell Ringer • What does your indicator tell you about the current state of the economy?

  18. Economics Indicators • Economics Forecasters, Inc. • You will learn more about the three main macroeconomic indicators • Real GDP • Inflation Rate (Change in CPI) • Unemployment Rate • You and your group will create a report about the current economic conditions in the US. • It should contain a business cycle graph (on the back) with a mark where your group believes

More Related