Transcript Objective 9.01-9.04 Identify the phases of the business

Objective 9.01-9.04 Identify the phases of the business
cycle and the economic indicators used to measure
economic activities and trends. Assess how current
events impact decisions by consumers, producers, and
government policy makers.
I: Business Cycle: Four cycles in an economy
A: Peak: period of prosperity, strong
productivity, general financial well-being.
B: Contraction: a decline in economic activity
C: Trough: the economy has “bottomed out”
low point in the business cycle.
1. recession: two consecutive quarters
of declining output ( 4 quarters in a year)
2. depression: a deeper and longer
recession; low production, high unemployment, bus.
failures. (The Great Depression of the 1930’s)
II: Economic Indicators of a healthy or sick
economy
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A: Gross Domestic Product (GDP) is
calculated by adding up the value of this
country’s annual output of all final goods
and services. ( Ex: the house, not the
lumber, nails, etc. ) Includes everything
produced in that country; a Japanese car
manufactured in Tennessee is counted but
something manufactured in Mexico or
Japan is not)
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B: Gross National Product: (GNP) : is a
measure of the market value of all goods and
services produced by Americans in one year.
(Ex: American Oil Co. in Scotland) An
American car company that produces cars in
Mexico is included.
C: Consumer Price Index: measures the
average change in prices for such items as
housing and food for the average urban
consumer. The market basket.
◦ 1. CPI is used to calculate inflation.
◦ CPI for 1979 was 72.6 and the CPI for 1980
was 82.4 before Reagan took over as
president.
Boom or Bust
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WHAT HAPPENS IN A BOOM?
- Businesses produce more goods
- Businesses invest in more machinery
- Consumers spend more money. There is a
FEELGOOD FACTOR
- Less money is spent by the Government
on unemployment benefits
- More money is collected by the
Government in income tax and VAT
- Prices tend to increase due to extra
demand
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WHAT HAPPENS IN A RECESSION?
- Businesses cut back on production
- Some businesses may go bankrupt
- Consumers spend less money. Fall in
FEELGOOD FACTOR
- Individuals may lose their jobs
- More money is spent by the Govt on
unemployment benefits
- Less money is collected by the Govt in
income tax and VAT (Value added tax)
- Prices start to fall
The Business Cycle
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The National Bureau of Research (NBER)
measures the state of the economy on
three factors:
◦
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Employment
Personal income
Industrial Production
Manufacturing and Trade sales
Economic Indicators Continued

D: Per Capita GDP: is the value of
what a person produces in a year
◦ 1. it is calculated by dividing the GDP by the
number of people who live in a nation.
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E: Standard of Living: measures
prosperity and wealth. Education, income,
debt levels, and housing quality contribute
to this economic indicator.
III: Government Debt and Global
Competition.
A: National Debt: the total amount a
country has borrowed plus interest on
that debt.
 Downsizing: when businesses cut their
workforce to cut costs, and increase
profits.
 Outsourcing: when another company,
often overseas, manages part of their
operations, such as customer service and
information technology.
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Read p. 636 Answer 2&4
Goal 9.02, 9.03 Describe the impact of gov’t regulation
on specific economic activities and explain the impact of
the movement of human and capital resources in the US
economy
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I: Gov’t Regulation
◦ A: Environmental protection:
 1. the EPA monitors and enforces pollution levels
from industries. Debate today: Does it have too
much power since it can bypass Congress and enact
administrative laws that impact citizens?
B: Consumer Protection:
1. the gov’t has mandated warning labels on
products.
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C: Labor Disputes:
◦ 1. The Federal Mediation and Conciliation
Service is the main federal agency for helping
to resolve labor and management conflicts.
II: Deregulation
A: Deregulation removes gov’t rules from
businesses and the economy to create a
freer marketplace.
 1. Firms in a strong financial position
typically benefit, while firms in a weak
position suffer. Causes mergers and
buyouts.
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III: Population Shifts
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A: Migration or a population shift occurs
many reasons such as job opportunities,
lower taxes, and affordable property.
◦ 1. People are leaving the Rust Belt and Frost
Belt (northeast) and (Great Lakes area)
and moving to the Sun Belt (southeast)
because of taxes, right to work laws,
affordable housing.
◦ 2. California is losing population due to
taxation and high cost of living.
How will these changes in
population affect the South?
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Write a short answer to how population
shifts could affect the political, economic,
and social character of the south?