The Business Cycle.

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Presentation transcript:

The Business Cycle

Four Stages of the Business Cycle The rise and fall of economic activity over time is called the business cycle. Prosperity Recession Depression Recovery

Prosperity When unemployment is low, production of goods and services is high, new businesses open, and there is prosperity. Prosperity is a peak of economic activity. Wages are usually higher There is a greater demand for goods to be produced

Recession During a recession, economic activity slows down Unemployment rate increases The general drop in the total production of goods and services makes GDP decline In a recession there are downturns in many industries A downturn in one industry can affect others Ripple effect- downturns in major industries can bring on a recession.

Depression High unemployment and low production of goods and services. A depression is a deep recession that affects the entire economy and lasts for several years. There is a lot of unused manufacturing facilities Fortunately depressions are rare The Great Depression

Recovery During a recovery, production starts to increase. A recovery is a rise in business activity after a recession or depression The new demand for goods and services stimulates more production, and the GDP grows Recovery leads back to prosperity as new businesses open and existing businesses increase productivity A recovery can take a long time or it can happen quickly During a recovery, some businesses innovate-meaning that they bring out new goods and services. These innovations can be different from what the businesses previously produced. If The innovation is popular SALES INCREASE DRAMATICALLY.

Class work/Homework The unemployment rate in your community has increased considerably because of the closure of two firms. Write a letter to the editor of the newspaper explaining what steps you might take in your business as a result.

Notebooks I will collect notebooks every two weeks. I will be checking for homework, neatness and notes A large part of your grade is based on, homework, class work and concentration in class. I will be assessing this from your notebooks.

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