Chapter 6

 The first part of chapter 6 seems boring and unnecessary, but there is one thing in it you should know about: The relationship between supply and demand.  Every business creates a “supply of a product or service.”

 That supply is directly proportional to the demand society has for it.  If they have too little of their product they are losing money.  If they have too much they are wasting money on something they won’t sell.

 If people want more of a product or service (online media) the company can expand their services. (Netflix)  If there is little, or no demand a product, company or industry shrinks (CDs), or sometimes even disappears (cassette tapes)

 What can cause changes in demand for a product?  Can you think of situations where supply of a product becomes a problem?  What happens if there is demand, but no supply?

 Almost all businesses experience periods of growth and contraction.  Good business decisions may allow a business to expand.  Miscalculations will cause them to contract.  What are some examples of this?

 This also happens on a larger scale where many businesses expand or contract at once. We call this the “business cycle.”  We call it a cycle because it repeats itself, up and down, all the time.

 The business cycle can look different in different industries but they all contain two major phases, expansion and contraction.  Key Terms: Boom: noun – a period of great prosperity.  Recession: noun – A period of temporary economic decline.

 This occurs when consumer spending is strong and companies invest in new factories/equipment.  Unemployment usually declines.  Wages, prices and interest rates usually rise. (there is more money floating around.)

 People just don’t know when to quit….  Expansion continues, prices continue to rise and people start to cut back on their spending.  Companies aren’t getting as much income if people aren’t buying their products so they cut back on THEIR spending too; no more expansion.

 People reduce their purchases and investments.  Business slows  If the businesses are bringing in less money they don’t need/can’t afford so many workers. People get laid off, or just not hired.

 If economic growth falls for two three month periods (or “quarters”) in a row we say the economy is in a “recession.”  If it stays that way for years we say it is in a “depression.”

 What can cause many businesses to expand at once?  What can cause many businesses to contract at once?  Think about what you might be hearing/reading in the news.

 Go to any, or a few of these newspapers   -on-business/ -on-business/ 

 Try and figure out what stage of the business cycle Canada is in. Browse through many different articles to get an idea of how we are doing.  Give examples! Three regional articles Three national articles

 What you found are bits and pieces of data that get compiled and averaged out in different categories (business performance, innovation, housing markets, etc.)  We call these ECONOMIC INDICATORS. They can help people guess if the market will be going up or down in the near future.