Bell Work What do you think the term cycle means? What are some examples of a cycle?

In Lak’ech by Luis Valdez Tu eres me otro yo Si te hago daño a ti, Me hago daño a mi mismo Si te amo y respeto Me amo y respeto yo You are my other me If I do harm to you, I do harm to myself If I love and respect you I love and respect myself

Bell Work What do you think the term cycle means? What are some examples of a cycle?

Chapter 12 Quiz Results A 1 8 7 19 B 21 C 9 26 D 10 30 F 14 13 12 53 Total A 1 8 7 19 B 21 C 9 26 D 10 30 F 14 13 12 53 Avg 66.7 75.8 65.3 62.5 66.2 67.1

Why would the sale of a secondhand car not be included in a calculation of GDP? The car is an intermediate product. The sale is a free-market transaction. The car does not represent new production. The transaction occurs in the underground economy.

What best explains why a nation’s GDP is an indication of its citizens’ overall well-being? It tracks certain types of sale transactions. It gauges the economic effects of free trade agreements. It gauges the number of voluntary economic transactions occurring in that nation. It measures how well the government is regulating the depreciation of capital equipment.

Which of these would economists count as a member of a household, but not part of a family? a woman sharing an apartment with her brother a single person with relatives who live elsewhere an adult male sharing an apartment with relatives an adopted child whose birth parents live elsewhere

Which of these states a difference between personal income (PI) and disposable personal income (DPI)? PI is measured before taxes are taken; DPI is measured after taxes are taken. PI is measured after taxes are taken; DPI is measured before taxes are taken. PI refers to an individual’s income; DPI denotes income from an entire sector. PI denotes income from an entire sector; DPI refers to an individual’s income.

Which of these accurately describes population growth in the United States between 1945 and 1964? The rate of growth increased slowly. The rate of growth increased rapidly. The rate of growth declined slowly. The rate of growth declined rapidly.

Which of these describes how net immigration is determined? by calculating the number of people moving into the country by calculating the number of people moving out of the country by adding the number of those entering the country to the number of those leaving it by finding the numeric difference between those entering the country and those leaving it

What does a fertility rate of 2.119 indicate? The average man will father two or three children in his lifetime. The average woman will bear slightly more than two children in her lifetime. The average family will eventually consist of two adults and one child. The average child will cost just over $2,000 a year to raise between birth and school age.

Which of these will most likely create a challenge for our nation within the next few decades? an increase in our fertility rate a decrease in our dependency ratio a southward shift in our center of population an increase in the percentage of elderly people

At what point does the Census Bureau distinguish between urban and rural populations? 1,000 inhabitants 2,500 inhabitants 1,500 inhabitants 5,000 inhabitants

Which of these are the two most significant causes of income inequality? changes in family structure and monopoly power differences in wealth and differences in education advances in technology and gender discrimination an increase in service jobs and declining union membership

Which of these does a Lorenz curve compare? levels of income and rates of taxation equal income distribution and actual income distribution the distribution of wealth and the distribution of income levels of education and levels of participation in assistance programs

Which of these groups is most vulnerable to poverty? people over 65 years of age people who live in enterprise zones children people without high school diplomas

Chapter 13: Economic Instability What are the causes of and consequences of instability in the economy?

Econ in the Movies: Back to the Future https://www.youtube.com/watch?v=3GTgniu xA50

The two phases of a business cycle are recession and expansion. Business Cycles: Characteristics and Causes The two phases of a business cycle are recession and expansion. A recession begins when the economy reaches a peak, and ends when it reaches a trough. Expansion is a period of recovery from a recession. Causes of the business cycle include external shocks, changes in investment spending, changes in monetary policy, fiscal-policy shocks, speculation and “bubbles,” and combinations of several of these factors.

Business Cycles in the United States During the Great Depression, real GDP declined nearly 50 percent and the number of unemployed people rose nearly 800 percent. Causes of the Great Depression included an enormous gap in the distribution of income, easy credit, global economic conditions, and high U.S. tariffs. Reforms established as a result of the Great Depression include Social Security, minimum wage, unemployment programs, Securities and Exchange Commission (SEC), and Federal Deposit Insurance Corporation (FDIC). After World War II, business cycles became much more moderate, with shorter recessions and longer periods of expansion. The Great Recession of 2008-09 was the longest and deepest recession in the United States since the Great Depression.

Predicting the Next Business Cycle Two methods of predicting business cycles are leading economic indicators and econometric modeling. Leading economic indicators include the Dow-Jones Industrial Average (DJIA) and the leading economic index (LEI). An econometric model is a mathematical model based on an output-expenditure model.

The 10 Indicators in the LEI 1. The average weekly hours worked by manufacturing workers. 2. The average number of initial applications for unemployment insurance. 3. The amount of manufacturers' new orders for consumer goods and materials. 4. The speed of delivery of new merchandise to vendors from suppliers. 5. The number of new orders for capital goods unrelated to defense. 6. The number of new building permits for residential buildings. 7. The S&P 500 stock index. 8. The inflation-adjusted monetary supply (M2). 9. The spread between long and short interest rates. 10. Consumer sentiment.

What are the two distinct phases of a business cycle. A What are the two distinct phases of a business cycle? A.Recession and expansion B.Peak and trough C.Recession and trough D.Expansion and peak

How did the establishment of a minimum wage help employees. A How did the establishment of a minimum wage help employees? A.It was designed to help prevent working people from getting exploited by employers. B.It was designed to help people provide for their own retirement. C.It was designed to help people who were temporarily out of work. D.It was designed to help people who wanted to own stocks.

What does the leading economic index (LEI) forecast. A What does the leading economic index (LEI) forecast? A.Changes in minimum wage B.Changes in the length of a workweek C.Changes in real GDP D.Changes in stock prices

GDP = C + I + G + (X – M) is an example of A. an econometric model. B GDP = C + I + G + (X – M) is an example of A.an econometric model. B.a leading economic indicator. C.a trend line model. D.a business fluctuation.

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How do you think high inflation might affect consumers? Reflection How do you think high inflation might affect consumers?

How might inflation be a good thing? Bell Work How might inflation be a good thing?

In Lak’ech by Luis Valdez Tu eres me otro yo Si te hago daño a ti, Me hago daño a mi mismo Si te amo y respeto Me amo y respeto yo You are my other me If I do harm to you, I do harm to myself If I love and respect you I love and respect myself

How might inflation be a good thing? Bell Work How might inflation be a good thing?

Measuring Prices and Inflation Inflation is a general rise in prices that can cause instability in the economy. The consumer price index (CPI) tracks monthly changes in prices paid by urban consumers for a representative “market basket” of goods and services. The CPI is achieved by dividing the cost of every market basket by the base-year market basket cost. Inflation is measured by finding the annual percentage change in the CPI. Creeping inflation (1 to 3 percent per year) is not a big problem, but hyperinflation (500 percent per year or more) and stagflation (stagnant economic growth and inflation) are bigger concerns. Other price indexes include the producer price index (PPI) and implicit price deflator.

Causes of Inflation Nearly every period of inflation is due to demand-pull, cost-push, wage-price spiral, and/or excessive monetary growth. In demand-pull inflation, prices are driven up when all sectors of the economy try to buy more goods and services than the economy can produce. Cost-push inflation occurs when rising costs of production inputs drive up the cost of products for manufacturers, thus causing inflation. The wage-price spiral occurs when workers are paid higher wages, which producers try to recover by charging higher prices, which in turn forces workers to ask for higher wages, and so on. Excessive monetary growth occurs when the money supply grows faster than the real GDP.

Inflation tends to make people change their spending habits. Consequences of Inflation Steady inflation over time causes steadily declining purchasing power, which can be a problem for retired people and people who are on fixed incomes. Inflation tends to make people change their spending habits. Inflation tempts some people to speculate on rising prices. During long inflationary periods, creditors are generally hurt more than debtors, because earlier loans are repaid later with dollars that buy less.

What statistical series is used to compute inflation. A What statistical series is used to compute inflation? A.The leading economic price index B.The consumer price index (CPI) C.The monthly market basket D.The producer price index (PPI)

A representative selection of commonly purchased goods and services used by consumers is called the A.producer price index (PPI). B.base year. C.consumer price index (CPI). D.market basket.

What is stagflation? A.A rise in the general level of prices of goods and services B.A decrease in the general level of the prices of goods and services C.A period of stagnant economic growth coupled with inflation D.A relatively low rate of inflation, usually 1 to 3 percent annually

How is a market basket used to measure the price level. A How is a market basket used to measure the price level? A.The price level measures the value of the market basket. B.The total value of the items in the market basket makes up the price level. C.A price index serves as the point of comparison for other years in a market basket. D.A price index provides a representative collection of goods and services used to compile a market basket.

What is the relationship between the terms inflation and debtors. A What is the relationship between the terms inflation and debtors? A.Debtors benefit from inflation. B.Debtors benefit from deflation. C.There is no connection between debtors and inflation. D.There is an inverse connection between debtors and inflation.

All sectors in the economy try to buy more goods and services than the economy can produce. The result is A.cost-push inflation. B.hyperinflation. C.demand-pull inflation. D.creeping inflation.

What is a decrease in the general level of the prices of goods and services? A.Deflation B.Stagflation C.Hyperinflation D.Creeping inflation

Who does the civilian labor force include. A Who does the civilian labor force include? A.People who are sixteen and older who are employed or looking for a job B.People sixteen and older who are confined to a mental health facility C.People eighteen and older who are in the military D.A and C

Measuring Unemployment The civilian labor force consists of everyone age 16 and above who is employed or seeking employment; people in the military, in jail, and in mental health facilities are not included. People are considered unemployed if they made a specific effort to find work but worked less than 1 hour for pay during the most recent week. The unemployment rate is the number of unemployed divided by the total number in the civilian labor force. The unemployment rate differs for people of different ages, races, and sexes; differences in work experience, education, training, and skills play a role, as does discrimination. About one-third of unemployed are long-term—without work for 27 weeks or more. The unemployment rate does not count those too discouraged to look for work or those who have only a part-time job.

Sources of Unemployment Frictional unemployment occurs when workers are between jobs; it is a short-term condition that causes little economic hardship. Structural unemployment occurs when changes in the economy reduce the demand for workers and their skills. Technological unemployment occurs when workers are replaced by machines or automated systems that make their skills obsolete. Cyclical unemployment is directly related to swings in the business cycle. Seasonal unemployment results from seasonal weather changes or other seasonal factors.

Costs of Instability Recession, inflation, and unemployment are all forms of instability that hinder economic growth. The GDP gap is a measure of the economic cost of unemployment. The misery index (discomfort index) is the sum of the monthly inflation and unemployment rates. Both workers and business owners are affected by uncertainty produced by an unstable economy. Economic stability adds to the political stability of the country, because people tend to become dissatisfied and vote incumbents out of office in times of economic instability. Recession, inflation, and unemployment can lead to higher crime rates, higher poverty, and more domestic problems.

Crash Course: Labor Markets and Minimum Wage https://www.youtube.com/watch?v=mWwXm H-n5Bo

What is the unemployment rate based on. A What is the unemployment rate based on? A.The number of unemployed people expressed as a percentage of all people over sixteen B.The number of unemployed people expressed as a percentage of the civilian labor force C.The number of unemployed people expressed as a percentage of the population D.The number of unemployed people expressed as a percentage of taxpayers

What is structural unemployment. A What is structural unemployment? A.Unemployment directly related to swings in the business cycle B.Unemployment caused by a change in the economy that reduces demand for workers C.Unemployment caused by technological developments or automation D.Unemployment caused by workers changing jobs or waiting to go to new ones

What is the difference between seasonal and cyclical unemployment. A What is the difference between seasonal and cyclical unemployment? A.Cyclical unemployment takes place because of changes in technology, while seasonal unemployment takes place every year. B.Cyclical unemployment changes every three years, while seasonal unemployment changes every year. C.Cyclical unemployment is caused by changes that prevail during certain times of the year, while seasonal employment changes once a year. D.Cyclical unemployment takes place over a business cycle, while seasonal unemployment takes place every year.

What is the difference between frictional unemployment and technological unemployment? A.Frictional unemployment is caused by workers changing jobs or waiting to get new ones. Technological unemployment is caused by hi-tech changes or automation that make some jobs obsolete. B.Technological unemployment is dictated by the workers’ actions while frictional unemployment is out of their control. C.Both frictional and technological unemployment are dictated by the workers’ needs, but the latter happens in the tech industry. D.Both frictional and technological unemployment are out of the workers’ control, but the latter occurs in the tech industry.

What community problems are made worse by economic instability. A What community problems are made worse by economic instability? A.Crime B.Poverty C.Marital instability D.A, B, and C

Reflection Based on the definition of unemployment, would you classify yourself as employed, unemployed, or neither? Why?

Define the following terms in your own words: Business cycle Inflation Bell Work Define the following terms in your own words: Business cycle Inflation Unemployment

In Lak’ech by Luis Valdez Tu eres me otro yo Si te hago daño a ti, Me hago daño a mi mismo Si te amo y respeto Me amo y respeto yo You are my other me If I do harm to you, I do harm to myself If I love and respect you I love and respect myself

Define the following terms in your own words: Business cycle Inflation Bell Work Define the following terms in your own words: Business cycle Inflation Unemployment

Chapter 13 Review/Practice Answer questions 1-13 on p. 393 Extra Credit questions 17 – 20 on p. 394 Keep your work until after the quiz

How are unemployment and inflation related to the business cycle? Reflection How are unemployment and inflation related to the business cycle?