1. Business Cycle Unit 4 Macroeconomics

2. By the end of this lesson you should know….
Essential Questions
How are unemployment, inflation and economic growth illustrated in the business cycle?
Georgia Performance Standard
SSEMA1 The student will illustrate the means by which economic activity is measured.
a. Explain that overall levels of income, employment, and prices are determined by the spending and production decisions of households, businesses, government, and net exports.
e. Define the stages of the business cycle, as well as recession and depression.
f. Describe the difference between the national debt and government deficits.
Terms
Peak
Trough
Recession
Depression
Expansion
Contraction
Business Cycle
Literacy Standards
RH Determine the central ideas or information of a primary or secondary source; provide an accurate summary that makes clear the relationships among the key details and ideas
RH Evaluate various explanations for actions or events and determine which explanation best accords with textual evidence, acknowledging where the text leaves matters uncertain
WHST Draw evidence from informational texts to support analysis, reflection, and research.

3. What is the business cycle?
The business cycle is a graphic representation of the ups and downs of the economy.
Peak
Contraction
Expansion

4. What is the business cycle?
Economists use data from Gross Domestic Product and plot points on a graph to create the Business Cycle. The business cycle is divided into four phases
Peak
Contraction
Trough
Expansion

5. The Phases of the Business Cycle
Peak- at this point Real GDP stops increasing
Contraction- this is a period where Real GDP in getting smaller.
Contraction that lasts for more than two quarters is called a recession
A particularly long and severe recession is called a depression
Peak
Contraction

6. The Phases of the Business Cycle
Trough- this is the point where the contraction period has ended and the economy is at its lowest point
Expansion- during this period the economy is experiencing growth
Expansion
Trough

7. How are employment and prices connected?
Quick Write
Think about what it means with real GDP changes. Explain what would happen with unemployment and prices at each stage of the business cycle.
Peak
Contraction
Trough
Expansion

8. How are employment and prices connected?
Peak- unemployment is at its lowest, prices are at their highest
Contraction- decreasing prices, increasing unemployment
Trough- unemployment is at its highest, prices are at their lowest
Expansion- increasing prices, decreasing unemployment

9. Can you identify and describe each phase?

10. Where are we today?
Class Discussion Based on this data, determine where you think we are in the business cycle today.
US Inflation Calculator
US Bureau of Labor Statistics

11. Now you should be able to…
Answer these Questions
How are unemployment, inflation and economic growth illustrated in the business cycle?
Perform these Standards
Illustrate the means by which economic activity is measured.
Explain that overall levels of income, employment, and prices are determined by the spending and production decisions of households, businesses, government, and net exports.
Define the stages of the business cycle, as well as recession and depression.
Define these Terms
Peak
Trough
Recession
Depression
Expansion
Contraction
Business Cycle
Sample Questions

12. What would you conclude about an economy characterized by increasing real gross domestic product (GDP), low unemployment, and increasing inflationary pressures?
This economy is in a slowdown.
The government needs to address the unemployment problem.
This economy is in the expansion phase of a business cycle.
The Federal Reserve should expand the money supply.
Over a two-year period, the nation of Parthia experiences a steep decline in unemployment rate, a rise in real GDP, and a stabilized price level. Parthia appears to be
at the start of a recession
in the middle of a depression
stagnating economically
in the middle of a boom period

13. Answer Key D C

14. Resources
US Bureau of Labor Statistics News Release July
US Inflation Calculator
Economics Help
Georgia Department of Education’s Economics/Business/Free Enterprise EOC Assessment Guide

15. Resources
Economics GPS Frameworks: Unit 4- “The Government and the Economy: Superhero or Villain”
Georgia Department of Education Released EOCT’s and answer keys