1. Miss Smith 7th Grade Civics *pgs. 534-537
The Business Cycle
Miss Smith
7th Grade Civics
*pgs

2. The Business Cycle
Business cycle- economic pattern in which an economy goes through good times and bad times
Expansion- period of the business cycle marked by growth
Inflation- rise in the cost of goods and services
Prices inflate/rise when there are more customers to compete for goods and services
How does expansion cause inflation? During periods of expansion, people have more money to buy goods and services, causing the demand for them to increase. This causes prices for goods and services to inflate

3. The Business Cycle
Costs of production- business costs such as wages, payments for raw materials, transportation, and interest on money borrowed
This could cause prices to rise
Peak- high point in the business cycle when expansion and inflation stop
Contraction- slow period in business cycle
What happens if an economic contraction becomes severe? The economy goes into a recession

4. The Business Cycle
Recession- period in the business cycle when businesses fail, people become unemployed, and profits fall
Trough- lowest point in the business cycle
Depression- very low trough when unemployment becomes very high

5. The Great Depression Took place in the 1930s
Stock prices fell and banks failed
Production slowed, businesses closed
Lasted 10 years
What was the Great Depression? Period during the 1930s when the U.S. economy went into the worst depression in history

6. The Great Depression
*Do not write
Place the following events leading to the Great Depression in correct order:
A) One in four people unemployed
B) Stocks fell sharply
C) Banks failed

7. The Government’s Response
The New Deal (established by Franklin D. Roosevelt) included ways to improve the economy. This included the creation of:
More jobs (civic construction/building parks and schools, etc.)
The FDIC and SEC
The Social Security system
What types of jobs did the government create during the Great Depression? Civic construction jobs
On a scale of 1 to 10, with 1 being little to no government involvement in the economy and 10 being complete government control over the economy, at what level do you think the government’s involvement should be? Explain.