1. Unit 6: Macroeconomic Systems & the U. S
Unit 6: Macroeconomic Systems & the U.S. Economy Lesson 4: Economic Indicators: Measuring the Economy
WARM UP
What do plants need to grow?
What do people need to grow? What do economies need to grow?
What is the essential feature of a republic?
ESSENTIAL QUESTIONS (WRITE DOWN!):
How do economists evaluate the strength of the economy?
Lesson Vocabulary:
Economic Indicators
The business cycle
Gross Domestic Product (GDP)
Economic expansion / growth
Inflation
Economic contraction
Consumer Price Index (CPI)
Recession
Unemployment Rate
Fiscal Policy
Poverty Rate
Federal Budget
Consumer confidence
Revenue
Deficit
Consumer spending
Surplus
Lesson Skills:
I can define inflation
I can distinguish between GDP, CPI, & the poverty rate

2. Class Website: DEADLINES & HOMEWORK:
Unit 6: Macroeconomic Systems & the U.S. Economy Lesson 4: Economic Indicators: Measuring the Economy
Class Website:
DEADLINES & HOMEWORK:
Lesson One: PT 6.1 – Due May 8
Lesson Two: PT 6.2 Due May 11
Lesson Three: PT 6.3 Due May 13
Lesson Four: PT 6.4 Due May 14
Review Packet: Due May 22nd
UNIT TEST: Friday, May 22nd
ALL Review Packets: May 28
FINAL EXAM: June 5
Lesson 6.4 Performance Task
Students will interpret a series of charts and graphs to draw conclusions about the strength of the economy.

3. Quick Quiz
1. This is caused by having limited resources and unlimited wants.
2. This term refers to what a person loses the chance to do when they make a trade off choice.
Trade-off
Scarcity
Demand
Supply
Opportunity Cost
Equilibrium Price

4. Quiz - continued
3. The law of ________ says that people are usually willing to buy ______ of a product when the price is lower. 4. The law of _______ says that producers are usually willing to sell _______ of a product when the price is _______.

5. Quiz
5. What happens to the price of carrots if Carrot Cake becomes the world’s most popular desert?

6. When demand is greater than supply.
When supply equals demand.
A store is likely to offer a sale on a product when it has this.
Surplus
Shortage
Equilibrium
Utility
Price

7. Quick Quiz – OPEN NOTE
B - This is caused by having limited resources and unlimited wants.
E - This term refers to what a person loses the chance to do when they make a trade off choice.
Trade-off
B -- Scarcity
Demand
Supply
E -- Opportunity Cost
Equilibrium Price

8. Quiz - continued
2. The law of DEMAND says that people are usually willing to buy MORE of a product when the price is lower. 3. The law of SUPPLY says that producers are usually willing to sell more of a product when the price is HIGH.

9. Quiz
4. What happens to the price of carrots if Carrot Cake becomes the world’s most popular desert? IT GOES up…

10. B - When demand is greater than supply.
C - When supply equals demand.
A - A store is likely to offer a sale on a product when it has this.
Surplus
Shortage
Equilibrium
Utility
Price

11. Economic Growth Is the economy getting bigger or smaller?
More money in the economy = growth
Less money = contraction

12. Economic Indicators The economy is complicated!! ECONOMIC INDICATORS –
things that we use to measure economic growth

13. INFLATION Over time, the cost of the same set of goods goes up
The dollar can buy less today than it could buy 50 years ago.
Deflation – when prices drop

14. Effects of Inflation
Currency loses value

16. Are U Down Wit’ GDP?
GROSS: total
Domestic: national
Product: stuff that has been produced
Gross Domestic Product (GDP) ~ the total dollar value of all final goods and services produced in a country in a single year
Most economists use GDP as the PRIMARY & MOST IMPORTANT ECONOMIC INDICATOR.
Textbook pp

17. Problems with GDP
It only measures the value of what is produced & sold
Poverty can increase while GDP goes up
Producing paper by cutting down the forest & destroying the environment can increase the GDP
Encourages businesses to make short term decisions that may be negative in the long run

18. Economic Indicators
Unemployment Rate ~ the percentage of people who are not working but are looking for jobs
Consumer Price Index (CPI) ~ measures inflation by tracking how much it costs to buy stuff
government tracks the prices of 400 common products each month to monitor inflation
Textbook pp

19. What year saw the highest level of unemployment on this chart?
What was the percentage of unemployed workers that year?

20. Poverty Rate
Poverty Rate – the percentage of people living below the poverty line
poverty line for a family of 4: $22,050
20% of children (1 of every 5) in Durham are living in poverty

21. What is Poverty. $22,050 equates to an hourly rate of $10
What is Poverty? $22,050 equates to an hourly rate of $10.80/hour 44 million Americans lived in poverty in 2009 (up from 31 million in 2002)
Persons in family
2009 Federal Poverty guideline 1
$10,830 2
14,570 3
18,310 4
22,050 5
25,790 6
29,530 7
33,270 8
37,010
For families with more than 8 persons, add $3,740 for each additional person.
Textbook pp

22. The Business Cycle
The ups and downs of the economy between growth and recession
Textbook p. 509

23. So, what do all the indicators tell us?
They help us understand the ups and downs of the economy
Is the economy growing or shrinking?
Are we in a recession?
A depression?

24. Economy grows and then contracts

25. What is a recession?
Recession ~ takes place when real GDP declines for 6 straight months or more
Trough – lowest point in economic cycle
Recessions do not usually last as long as the economic expansion periods
Peak – high point of expansion in a given cycle
Textbook p. 510

26. Recessions & Unemployment
If consumers stop spending money, businesses often:
Get nervous
Stop hiring
Lay off staff to save money
Weak consumer spending
job cuts
lower spending

27. 8 minute practice: Graph / Chart analysis
Work individually or in pairs to analyze the charts on your handout and practice being an economist reading economic indicators.
Finish early?
log in to kahoot.it!!!
Log into
Select our class and play the “People’s Pie” game to practice making decisions about the FEDERAL BUDGET.

29. Unit 6: Macroeconomic Systems & the U. S
Unit 6: Macroeconomic Systems & the U.S. Economy Lesson 4: Economic Indicators: Measuring the Economy
WARM UP
What does GDP measure?
What does CPI measure?
What is the definition of a recession?
ESSENTIAL QUESTIONS (WRITE DOWN!):
How do economists evaluate the strength of the economy?
Lesson Vocabulary:
Economic Indicators
Consumer spending
Gross Domestic Product (GDP)
The business cycle
Economic expansion / growth
Inflation
Consumer Price Index (CPI)
Economic contraction
Unemployment Rate
Recession
Poverty Rate
Consumer confidence
Lesson Skills:
I can define inflation
I can distinguish between GDP, CPI, & the poverty rate

30. Class Website: DEADLINES & HOMEWORK:
Unit 6: Macroeconomic Systems & the U.S. Economy Lesson 4: Economic Indicators: Measuring the Economy
Class Website:
DEADLINES & HOMEWORK:
Lesson One: PT 6.1 – Due May 11
Lesson Two: PT 6.2 Due May 12
Lesson Three: PT 6.3 Due May 14
Lesson Four: PT 6.4 Due May 15
Lesson Five: PT 6.5 Due May 19th.
Review Packet: Due May 22nd
UNIT TEST: Friday, May 22nd
ALL Review Packets: May 28
FINAL EXAM: June 5
Lesson 6.4 Performance Task
Students will interpret a series of charts and graphs to draw conclusions about the strength of the economy.

31. Monetary Policy & Fiscal Policy
Monetary Policy – set by Federal Reserve Bank
Money supply
Interest rates
Fiscal Policy – set by congress
The Federal Budget
What we are spending money on
How we are raising money (TAXES!!!!)

32. Fiscal Policy Raise or lower taxes? Raise or lower spending?
What type of tax?
On whom?
Raise or lower spending?
On what?
FISCAL POLICY -- NOW IT’S YOUR JOB:
Choose either: play the game “People’s Pie” on or
Balance the budget using the “Money Matters” handout on paper

33. Exploring the Money Matters of the Federal Government$ $
Money Matters $
Exploring the Money Matters of the Federal Government

34. Where Does Federal Money Come From?$

35. Where Does Federal Money Come From?$
When the government needs more money, it can’t simply start printing it.
It has to come from somewhere!

36. Where Does Federal Money Come From?$
TAXES!
You might have heard people complain about paying taxes from time to time, but without taxes our government couldn’t run some very important programs that help people!

37. Where Federal Money Comes From$
The money that the government runs on is raised through taxes.
That’s right!
The money raised by the government through taxes is called revenue!
This money is called REVENUE!

38. Where Federal Money Comes From$
There are several types of taxes…
Social Security
Income Tax
This tax is taken to provide retired people with income they need. In 2010 it was 6.2% of your total income!
This tax is based on a percentage of what you make. The more you make, the higher percentage you pay!
Corporate Income Tax
Excise Tax
These are taxes paid on certain goods like alcohol, cigarettes, jewelry, and gas.
Just like the personal income tax, corporations must pay income taxes!
Other Taxes
This includes estate taxes (when someone dies) and taxes on goods brought from other countries (tariffs).

39. Where Federal Money Comes From$
TOTAL: $2,381,000,000,000

40. Quick Review! $ Revenue is… A. New “reve”
B. Money that the government raises through taxes
C. Money that the government spends on taxes
D. Money that the government spends over their budget

41. Where Federal Money Goes$
With all that money (all $2,381,000,000,000 of it) and all the projects in the country to think about, there is only one thing that can help keep it all straight…
The
Federal Budget

42. Where Federal Money Goes$
What’s a BUDGET?

43. Where Federal Money Goes$
Budget: A plan for how money is earned and spent

44. Where Federal Money Goes$
Federal Budget: A plan for how the government brings in and spends revenue

45. Where Federal Money Goes$
A budget is…
A. a type of plan for printing money.
I see! A budget is a plan for receiving and spending money.
B. something the government uses to measure things.
C. a plan for receiving and spending money.
D. a pet bird.

46. There are several ways the federal government spends money…
Federal Spending $
There are several ways the federal government spends money…

47. These are just broad categories!! Let’s break them down…
Federal Spending $
These are just broad categories!! Let’s break them down…

48. Defending our nation is a high priority.
FY 2010: National Defense $
Defending our nation is a high priority.
In 2010, more than $650 billion dollars went to funding military operations, personnel, supplies, and research!
Total Defense Spending:
$722,000,000,000

49. FY 2010: Social Security $
When people are retired or disabled, Social Security helps them get the financial assistance they need.
Total Social Security Spending:
$724,000,000,000

50. These programs provide necessities like housing and food.
FY 2010: Income Security $
Other types of financial assistance help people who are disabled, unemployed, or needy.
These programs provide necessities like housing and food.
Total Income Security Spending:
$629,000,000,000

51. When people retire, they often lose their health insurance.
FY 2010: Medicare $
When people retire, they often lose their health insurance.
The U.S. government has established Medicare to help them pay for health care!
Total Medicare Spending:
$462,000,000,000

52. FY 2010: Health $
Doctors’ visits, medicines, emergency care… these are necessities for everyone!
Insurance for the needy, disease research and control, and children’s health insurance all fall into this category.
Total Health Spending:
$386,000,000,000

53. There are many other categories of government spending. These include:
FY 2010: Other Spending $
There are many other categories of government spending. These include:
Education
Science
Environment
Development
Transportation
Other Government Spending:
$677,000,000,000

54. The total estimated budget for 2010 was
FY 2010 Spending $
The total estimated budget for 2010 was
$3,600,000,000,000
Trillions!
Thousands
Hundreds
Billions
Millions

55. Quick Review! $ The federal budget is…
A. The plan for managing and spending state money.
B. The plan for raising government funds.
C. The plan for figuring out who will feed the dog.
D. The plan for managing and spending federal money.

56. Two Possible Outcomes $
After all the revenue is counted and all the spending is tallied, there are two possible outcomes for the budget…

57. Deficit Surplus Two Possible Outcomes $
The government spends MORE than it raises in taxes so that it must borrow money!
The government spends LESS than it raises in taxes so that there is money left over! OR
Deficit
Surplus

58. Deficit Two Possible Outcomes $
In a deficit there is no money left over after the budget is laid out.
Trillions of Dollars
In fact the government must borrow money to complete the budget!

59. Surplus Two Possible Outcomes $
In a surplus there is money left over after the budget is laid out.
Trillions of Dollars
The government can use the money that is left over for other projects!

60. Two Possible Outcomes $
This chart shows that there has been a deficit almost every year since 1980.
Deficit: more money spent than earned
Surplus: less money spent than earned

61. Most of the revenue raised by the government comes from _________tax.
Fill in the blank: $
Most of the revenue raised by the government comes from _________tax.
income

62. Match the definition to the term:$
budget
money left over after the budget is spent
federal budget
spending more than is raised in taxes
surplus
the plan for bringing in and spending revenue
a plan for how money is earned and spent
deficit

63. Match the definition to the term:$
budget
money left over after the budget is spent
federal budget
spending more than is raised in taxes
surplus
the plan for bringing in and spending revenue
a plan for how money is earned and spent
deficit

64. Match the definition to the term:$
budget
money left over after the budget is spent
federal budget
spending more than is raised in taxes
surplus
the plan for bringing in and spending revenue
a plan for how money is earned and spent
deficit

65. Match the definition to the term:$
budget
money left over after the budget is spent
federal budget
spending more than is raised in taxes
surplus
the plan for bringing in and spending revenue
a plan for how money is earned and spent
deficit

66. budget federal budget surplus deficit Way to go! REVIEW $
a plan for how money is earned and spent
budget
federal budget
the plan for bringing in and spending revenue
Way to go!
surplus
money left over after the budget is spent
deficit
spending more than is raised in taxes

67. Choose the right answer:$
When the country spends more than it earns that is called a…
A) Surplus
B) Deficit OR

68. Choose the right answer:$
When the country spends less than the amount of money it earns it is called a…
A) Surplus
B) Deficit OR

69. Choose the right answer:$
According to the chart shown earlier, our country usually has a…
A) Surplus
B) Deficit OR

70. Our country usually spends more than it earns, so we have a deficit!
REVIEW $
That’s right!
Our country usually spends more than it earns, so we have a deficit!

71. Work Time Complete the HANDOUT ON FISCAL POLICY / play People’s Pie.
Review Packet (Due May 28th; Bonus if done by 5/22):
Revise / Complete units 1- 5
Complete unit 6 through what we have covered so far
January 1st I will assign a grade for completion of EVERY review packet from the course:
Packets were provided in print and are shared with you electronically. They will NOT reprinted/copied again.
If you never did them or lost them, you must do /redo them by May 28
FIRST 11 PEOPLE TO show me a COMPLETE PACKET GET +10 BONUS POINTS ON IT