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Four Stages of the Business Cycle Business Cycle: the rise and fall of economic activity over time. Prosperity Recession Depression Recovery
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Chapter 3Economic Activity in a Changing World3.2The Business Cycle
Guiding the Economy
U.S. economy is shaped by a mix of public and private forces.
The government spending of tax dollars effects the economy.
The government takes certain steps to influence the economy.
Four Stages of the Business Cycle
Business Cycle: the rise and fall of economic activity over time. Prosperity Recession Depression Recovery
Prosperity
Prosperity: a peak in economic activityWages are higherMore income per workerUnemployment rate is low.Demand is high on most goods.
Recession
Recession: when economic activity slows down.Businesses produce less.Workers are paid less or laid off.Unemployment rate starts to increase.Drop in GDP.
Depression
Depression: a deep recession that affects the entire economy and lasts for several years.Unemployment rate is high.GDP is lowFew goods and services are available.Stock market may “crash”.
Recovery
Recovery: a rise in business activity after a recession or depression.Unemployment rate begins to lower.GDP starts to rise.Demand for products and services is on the
rise. Innovation starts to occur.
Homework
Complete Chapter 3-2 Reading Activity and 3-2 Graphic Organizer (Save to S:Drive)
Review questions on page 47, 1-3