 PRODUCTION INCREASES  PEOPLE GO BACK TO WORK  SPENDING INCREASES  DEMAND STIMULATES PRODUCTION  BUSINESSES MAY START TO INNOVATE A NEW PRODUCTS  PROFITS INCREASE, BUSINESS GROWS, ECONOMIC ACTIVITY SOARS

 LOW UNEMPLOYMENT  PRODUCTION IS HIGH  NEW BUSINESSES OPEN  HIGHER WAGES  HIGH DEMAND FOR GOODS AND SERVICES

 SPENDING DECREASES  DEMAND FOR PRODUCTS DECREASE  BUSINESSES PRODUCE LESS  UNEMPLOYMENT INCREASES  GDP DECLINES  PRICES INCREASE  (INFLATION SETS IN)

 HIGH UNEMPLOYMENT  LOW PRODUCTIVITY  A DEEP DEPRESSION AFFECTS THE ENTIRE ECONOMY AND LAST FOR SEVERAL YEARS

 Throw a stone into a serene lake and you’ll create a ripple effect in the water

A. Healthy B. A little sick C. So-so D. Mostly unhealthy E. Extremely unhealthy

 Does the economy seem better or worse than last year?  How has the downturn affect you? Your family?  What have you noticed in the community that shows the health of the economy?  What have you noticed in the community that may prove or show it may be getting healthier?

 Throw a major change at a large employer and you’ll create a ripple effect in the economy

A large auto factory that employed more than 1,000 people closed in Belvidere, IL. Population 28,350.  What effect would it have on the community?

BUSINESSES GOVERNMENT INDIVIDUALS CIRCULAR FLOW MODEL