1. Quick Review What is GDP? What is CPI? What is unemployment?
Measures size of economy by adding total value of all final goods and services produced in the economy
What is CPI?
Measures change in prices for a basket/set of goods
What is unemployment?
The percentage of the labor force (16 and up) who are not working, but are looking for work.

2. Quick Review Label each of the following on the Business Cycle:
Contractionary Period
Trough
Expansion
Peak

3. Why do markets grow?

4. Why do markets grow? Market economies tend to grow because:
There are incentives which encourage people to work ($)

5. Why do markets grow? Market economies tend to grow because:
Incentives encourage entrepreneurs to bring innovations to market ($)

6. Why do markets grow? Market economies tend to grow because:
The incentive for profit drives businesses to expand ($)

7. How do we help a struggling economy?

8. How do we help a struggling economy?
When growth is slow and unemployment high, government can:
Use investment tax credits (tax break) to encourage businesses to expand and hire people

9. How do we help a struggling economy?
When growth is slow and unemployment high, government can:
Implement job training programs

10. How do we help a struggling economy?
When growth is slow and unemployment high, government can:
use fiscal policy:
Lower taxes
Increase spending

11. Who helps the economy? The Federal Reserve System (Banks’ Bank)
Uses monetary policy to help the economy toward full employment, stable prices, and stable growth.

12. How does government help the economy?
Ongoing governmental economic support includes:
working to assure the health of the nation’s banks and stock market through regulation and enforcement

13. How does government help the economy?
Ongoing governmental economic support includes:
supporting unemployment insurance

14. How does government help the economy?
Ongoing governmental economic support includes:
encouraging invention, innovation, and growth through patent and copyright laws

15. How does government help the economy?
Ongoing governmental economic support includes:
promoting pure research (e.g., Human Genome Project) through grants and programs such as NIH (National Institutes of Health).