Economic Activity in a Changing World Chapter 3 Economic Activity in a Changing World
3.1: US Economic History
Net or Newspapers? Turn to p.39 in your book read quietly the passage titled “Net or Newspapers” Think? How do you obtain your top news stories of the day? How does Penncrest get the word out?
Major Purpose of an Economic System? To produce the goods and services wanted by people
Gross Domestic Product The final output of an economy = goods & services Over specific period of time Determines how well an economy is performing
How to calculate GDP? Consumer goods and services (Spending) Business goods and services (Production) Government goods and services (Spending from our taxes) Goods and services sold to other countries (Excess of exports over imports)
United States GDP According to Trading Economics, the GDP value of the United States represents 25.30 percent of the world economy.
Standard of Living Level of material comfort as measured by the goods and services that are available.
Unemployment Rate Measures the number of people who are able to work but do not have a job during a given period of time. Possible reasons for unemployment: Quit your job Just graduated from college Laid off from work, corporate downsizing 1999 --> 4.4% 2012--> 8.1% 20137.3%
Rate of Inflation Inflation - increase in cost An economy is too productive Demand rises and cost rises Hyperinflation Deflation - decrease in cost Demand decreases and cost decreases Could cause and economic collapse
National Debt The main source of income for a government is taxes. Defense, Education, Social security Budget Deficit Spending more than collecting Borrows primarily from banks and other countries National Debt Total amount government owes http://www.usdebtclock.org/
Introduction Activity 3.2 The Business Cycle Introduction Activity
Sports Team Step 1: Using your iPad research and choose a sports team (any sport any team) Step 2: Research the last three seasons for that team (wins and losses) Step 3: Look up three consecutive seasons for that team (about 15-20 years ago) Step 4: Explain the winning/losing streaks for that particular team How does that relate to the business cycle?
3.2: The Business Cycle
The Business Cycle Represents the rise and fall of economic activity over time
Prosperity Peak of economic activity 1990s Any variable can change things Companies produce too much, people stop buying, or inflation starts to rise
Recession Slowness of economic activity One industry, related industries, or spread to the entire economy Ripple effect
Depression Deep recession Lasting years Limited to one country but usually spreads to others October 29, 1929 Black Tuesday GDP fell 50% in 4 years Unemployment rose 800% Banks failed Towns and counties printed their own money
Recovery Rise in activity after a recession or depression New product innovation and demand for goods Profits increase, business grows, economic activity soars.