Transcript Unit 7 GDP gREAT dEPRESSIONx

Journal: Interpret this cartoon, what do
you all think the roller coaster symbolizes?
Key Terms
– Productivity/GDP: total
of all the final products
produced in a country
– Stock Market (bull vs
bear market): where
shares of corporations
are bought and sold.
Employment
• Unemployment: measures the people who
can work but do not have jobs.
• Full Employment: when all people who can
work have jobs
• Underemployment: having a job which you
are overqualified and underpaid for.
– Ex: PhD. working at McDonalds
GDP: Gross Domestic Product
• Total value of all the final products that are
produced within a country in one year.
• Final products: a good sold to a user (as
opposed to all the ingredients of that
product). The car, but not the steel or the
rubber that went into making it
Per Capita GDP
• GDP divided by a country’s population
In other words: The GDP per person
The darker the blue, the better Per Capita GDP.
How’s the US doing?
CPI or the Consumer Price Index
• Measures inflation rates
for the nation’s economy
– Inflation: the general rise in
price of an item over time.
• Is determined by
measuring the price of a
standard group of goods
meant to represent the
“market basket” of a
typical consumer.
Market Basket might include
cost of….
•Food and drinks
•Medical care
•Housing
•transportation
How much do these cost?
In March
Then
again
in
May.
Market Basket might include
cost of….
•Food and drinks
•Medical care
•Housing
•transportation
Record Inflation brings living standard
to a new low.
• http://www.nbcnews.com/video/nightlynews/26202512#26202512
• Think Pair Share If this trend continues what
does this mean for young Americans
compared to older Americans? What can we
do to alleviate the situation?
The Stock Market
• Where shares of corporations are bought and
sold.
– Dividends: money earned by your share of a stock
– Capital Gains: money earned when you sell your
stock
• Bull Market: Rising
• Bear Market: falling
Bear vs. Bull Market
• The Chicago Bears just aren’t
that good and often FALL, just
like a bear market.
• When Michael Jordan was on
the Chicago Bulls, he would
always rise up to dunk just like
the rising market.
Checking for Understanding Matching
• 1. Kelly just graduated from
Charlotte Law School 6 months
ago, she is working at Banana
Republic at South Park Mall.
• 2. Bobby got fired in June he is
seeking employment.
• 3. Mayberry is a model town. In
the town of Mayberry all 3000
residents are employed.
• Unemployment
• Full Employment
• Under Employment
The Business Cycle
Expansion
Peak
Contraction
Trough
Contraction (a.k.a. “Recession”)
• Economy is DECLINING
– Bear market
– GDP down
• Unemployment is RISING
Trough (a.k.a. “Depression”)
• Economy is at its LOWEST
– GDP at LOWEST
• Unemployment is at its HIGHEST
– EX: the Great Depression 1929-1939
Stock Market Crash
1929, “Black Tuesday”
Wall St.
Run on the banks!
NO FDIC
The Great Depression
The Great Depression
1933: unemployment=25%
Today: unemployment = 8.6%
Half Page Reflection: How does the
stock market crash compare to recent
stock market scares?
• http://www.nbcnews.com/video/nightlynews/27072042#27072042
• http://www.nbcnews.com/video/today-inhistory/21409475#21409475
New Deal: Exploring Programs that
were created in response to Great
Depression
• http://www.fdrheritage.org/new_deal.htm
• Create a program designed to benefit the
economy today.
• Name
• Mission statement
• 3 Goals Your organization hopes to accomplish. In
detail describe how this will help our society.
Expansion
• Economy is IMPROVING
– Bull market
– Inflation (CPI rises)
– GDP up
• Unemployment is FALLING
Peak (a.k.a. “Boom”)
• Economy is at its HIGHEST
– GDP is at its HIGHEST
• Unemployment at its LOWEST
EX: the dot com boom in the 1990s
Warm up
• Why is it a bad thing when the economy
grows to fast?
• What are interest rates? If interest rates are
lower what does that mean for spending?
• What do liberals and conservative believe in
when it comes to government interference in
the economy?
• Give one example of government interaction
in the economy.
Federal Reserve
• The Federal Reserve (FED)
is USA’S Central Bank
• It Regulates Monetary
Policy
• Video
– Write down what a
Central Bank is and its
mission
• Tools of regulating
economy
– Write down the 3 tools
the FED uses
Ben Bernanke- Chairman of
FED
Federal Reserve: How it works.
• http://content.time.com/time/video/player/0,
32068,57544286001_1948059,00.html
• http://www.youtube.com/watch?v=yzry6tn0Y
NI
Tools of the Central Bank
1. Interest Rates/
Monetary Policy: how
much you have to pay
if you borrow money
Low Interest Rates:
Expand Economy
High Interest Rates:
Slow Economy
2. Liquidity- providing
loans to banks to help
stabilize financial
system
lender of last resort
• 3. Providing regulation
and supervision: keeps
financial system healthy
by regulating banking
system
Gold Standard
All paper money is backed by gold
US off the gold standard in 1971
Why? Hint: inflation
Fiat
• Money has value because of law not gold
• http://dailyreckoning.com/fiat-currency/
Fiscal Policy
• Tools used by the elected government to
stimulate the economy
– Stimulus- money in the economy to help stimulate
it
• Spend money to make money
– Examples- taxes (including tax breaks), welfare
NC Economics How our state makes
MONEY !
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Tobacco Farming
Textiles
Research- Research Triangle
Finance/Banking- Charlotte
Policy making scenario
• In groups of 3-4 people you must decide the
best way to use monetary and fiscal policy to
fix the problems that you are presented with.
• You must have explain which tools you will use
and how you will use those tools to fix the
problem at hand.
• You must explain how to use 1 monetary and
1 fiscal policy for your problem
Scenario #1
• The economy is in contraction. Less people are
spending money on items such as houses,
cars, ect. The hardest hit are middle class and
lower class Americans.
• You must explain how to use 1 monetary and
1 fiscal policy for your problem
Scenario #2
• The economy is in a rapid expansion. People
are spending money at unprecedented rates.
Economists are concerned that this rapid
economic growth is happening too fast and
will soon lead to a bust. You are tasked with
slowing the economy gradually.
• You must explain how to use 1 monetary and
1 fiscal policy for your problem
Supply and demand scenarios
• Create 3 scenarios where the supply and
demand curve shift. One must be a supply
shift one a demand shift and one a double
shift.
• Draw the supply and demand curve for each
scenario and solve each scenario.