Terrific Tuesday December 8 D72 Complete the cost/benefit analysis found on page 533. (NB) 3 rd – be ready to present your rap

A process of examining the advantages (benefits) and disadvantages (costs) of each available alternative in arriving at a decision. Cost-Benefit Analysis

Answer yesterday’s EQ (3 rd only)

GDP = Gross Domestic Product = the total amount of goods and services produced by the country in one year Handout: Calculating GDP 3rd

2.What was the Great Depression? A period during the 1930s when the US economy went into the worst economic depression in history

Government economic policy prior to the Great Depression ”laissez-faire” – hands-off approach The government did not try to control inflation, increase production or end unemployment.

3. What was the government’s response to the Great Depression? A program called the New Deal that created new jobs and led to lots of government involvement in the economy.

EQ: What are some common economic problems, and how does the government address these problems?

Chapter 20, Section 2 1. What kinds of problems can occur in the economy, & what causes them? Problem Inflation – prices of goods & services rise but wages do not increase Cause Economic growth/expansion Problem Unemployment Cause Recession

What contributes to economic difficulties such as inflation, unemployment, and recession? 1. The money supply Too much money in circulation leads to inflation. Banks issuing too many loans also causes inflation.

2. Government spending The government spends money received from taxes & from loans (money the government borrows) which can cause inflation.

3. Productivity is the amount that a worker produces per hour. Rising productivity leads to higher wages, higher profits, & lower prices. In recent years, productivity in the US has lagged behind other countries making foreign products less expensive than American-made goods.

Review What are the most serious challenges to the economy? Unemployment recession Inflation

2.So, how can the government address these economic problems? 1.Fiscal policy (the government policy of taxing & spending money) Recession – The government can reduce the amount of taxes individuals pay & increase government spending. Lower taxes = more money in your pocket to spend & to save which stimulates businesses to produce & creates jobs. Expansion – The government might increase taxes & cut spending to slow down inflation.

2. Monetary Policy Recession – The “Fed” (who controls the amount of money in the economy) can reduce interest rates. This puts more money into the economy. Expansion – The Fed can raise interest rates. This takes money out of the economy.

3. How can citizens/consumers help to improve the economy (during a recession)? By reducing their spending & by saving more of their income. Buying American- made products. By Increasing productivity – become more efficient in the work place

Answer today’s EQ