Miss Smith 7th Grade Civics *pgs. 534-537 The Business Cycle Miss Smith 7th Grade Civics *pgs. 534-537

The Business Cycle Business cycle- economic pattern in which an economy goes through good times and bad times Expansion- period of the business cycle marked by growth Inflation- rise in the cost of goods and services Prices inflate/rise when there are more customers to compete for goods and services How does expansion cause inflation? During periods of expansion, people have more money to buy goods and services, causing the demand for them to increase. This causes prices for goods and services to inflate

The Business Cycle Costs of production- business costs such as wages, payments for raw materials, transportation, and interest on money borrowed This could cause prices to rise Peak- high point in the business cycle when expansion and inflation stop Contraction- slow period in business cycle What happens if an economic contraction becomes severe? The economy goes into a recession

The Business Cycle Recession- period in the business cycle when businesses fail, people become unemployed, and profits fall Trough- lowest point in the business cycle Depression- very low trough when unemployment becomes very high

The Great Depression Took place in the 1930s Stock prices fell and banks failed Production slowed, businesses closed Lasted 10 years What was the Great Depression? Period during the 1930s when the U.S. economy went into the worst depression in history

The Great Depression *Do not write Place the following events leading to the Great Depression in correct order: A) One in four people unemployed B) Stocks fell sharply C) Banks failed

The Government’s Response The New Deal (established by Franklin D. Roosevelt) included ways to improve the economy. This included the creation of: More jobs (civic construction/building parks and schools, etc.) The FDIC and SEC The Social Security system What types of jobs did the government create during the Great Depression? Civic construction jobs On a scale of 1 to 10, with 1 being little to no government involvement in the economy and 10 being complete government control over the economy, at what level do you think the government’s involvement should be? Explain.