 Expansion- The economy is steadily growing, employment & production are increasing and people are spending more.  Peak- Production, employment, spending, & wages are at it’s highest point.  Contraction- The economy is starting to decline, interest rates rise, spending decreases, unemployment rises & production decreases  Trough- The economy is at it’s lowest point, high unemployment, falling stock prices, minimal production.

 GDP- Gross Domestic Product, measures the size of the economy  Capital Gain- A stock is worth more that when it was bought.  Dividend- % of corporation profits distributed to stockholders.

 HOW DOES THE GOVERNMENT USE TAXES TO REGULATE THE ECONOMY?  SUMMARIZE THE DIFFERENCE B/W REGRESSIVE AND PROGRESSIVE TAXES  HOW DOES GOVERNMENT SPENDING AFFECT THE ECONOMY?  IN WHAT 3 WAYS DOES THE FED CONDUCT MONETARY POLICY AND CONTROL THE AMOUNT OF MONEY IN CIRCULATION?

 What happens to the money supply when the FED raises the discount rate?

 The business cycle acts like a roller coaster and has 4 main parts: 1. Expansion: The steady ride up is characterized by a growing economy, more production, increased employment, people are able to spend more. 2. Peak: Expansion will reach the point at which production, wages, and employment are at it’s highest point (Full Employment).

3. Contraction: Economy is starting to come back down and is characterized by falling production, high interest rates, declining profits, decreased demand, increased unemployment.  Recession: When the period of contraction lasts from 6-8 months. 4. Trough: Economy is at its lowest point. This period is characterized by high unemployment, low economic production, and falling stock prices.  Depression: If it continues to worsen or last an extended period of time

 What might the FED do during the contraction part of the business cycle?  Lower the reserve requirement, lower the discount rate or buy back Treasury Bonds

 Economic Indicators › Facts and data that help track the business cycle. 1.Gross Domestic Product (GDP)  Total value of all goods/services produced in an economy 2.Per Capita GDP  Calculates the number of goods produced per person.  Preferred by economists because it indicates the standard of living  Level of economic prosperity at which people live 3.Consumer Price Index (CPI)  Monthly index that measures the prices of goods/services (inflation) 4.National Debt  How much money the Federal Government owes

GGovernment spending and tax policies. TTaxes go up…people spend less TTaxes go down…people spend more

 New York Stock Exchange (Wall St.)  Buy or sell stock

 Two ways to earn profits: 1. Dividends: A % of the corporation profits that are distributed to the stockholders. 2. Capital Gain: Selling a stock at a higher price than when you bought it.

 EQ: EXPLAIN HOW THE FED MAY CONTROL THE MONEY SUPPLY DURING THE DIFFERENT PARTS OF THE BUSINESS CYCLE?

 Summarize the 4 main parts of the business cycle.  What might the FED do during the contraction part of the business cycle?  Summarize the 4 economic indicators that experts use to track the business cycle.  What are two ways to earn a profit by investing in the stock market?

 What are the two ways a person can make money in the stock market?  Capital gain- Sell stock for more than you bought it  Dividend- Receive part of corporate profits based on how much stock you hold