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Life Within the Business Cycle
Target: I can identify the four parts of the business cycle and what signs let me know a change might happen.
Business Cycle
The repeated rise and fall of economic activity over time
Business Cycle
The repeated rise and fall of economic activity over timeThe Business Cycle is divided into four sections: (graph on next slide)– Expansion– Peak– Contraction– Trough
Four Sections of Business Cycle
Expansion
Peak
Contraction
Trough
Recessions occur in the lower part of this process
Recessions occur in the lower part of this process
In a recession, producers of durable goods are hurt the most
Recessions occur in the lower part of this process
In a recession, producers of durable goods are hurt the most– A product that has an expected life span of several
years, and tend to be relatively expensive
Recessions occur in the lower part of this process
In a recession, producers of durable goods are hurt the most– A product that has an expected life span of several
years, and tend to be relatively expensive– Ex. Cars, appliances, furniture
Recessions occur in the lower part of this process
Nondurable goods do not change as greatly in a recession
Recessions occur in the lower part of this process
Nondurable goods do not change as greatly in a recession– Goods that are intended for immediate use and are
less expensive
Recessions occur in the lower part of this process
Nondurable goods do not change as greatly in a recession– Goods that are intended for immediate use and are
less expensive– Ex. Food and clothing
Forecasting the Cycle
The department of commerce will issue reports that warn of leading indicators
Forecasting the Cycle
The department of commerce will issue reports that warn of leading indicators– These are signs that the economy may undergo a
change
Forecasting the Cycle
The department of commerce will issue reports that warn of leading indicators– These are signs that the economy may undergo a
change
They monitor things like: building permits, store inventories, orders for new goods
Forecasting the Cycle
The department of commerce will issue reports that warn of leading indicators– These are signs that the economy may undergo a
change
They monitor things like: building permits, store inventories, orders for new goods– If a store has to order new goods, it is a sign that the
economy is improving
Forecasting the Cycle
This info is very important to businesses because it may change the way that they do business– Ex. If a down-turn is predicted they will not hire
Forecasting the Cycle
This info is very important to businesses because it may change the way that they do business– Ex. If a down-turn is predicted they will not hire
However, there is no guarantee from these indicators
