1. The Great Depression
The Business Cycle

2. Economy
Economy = the production and consumption of goods and services of a community
So, an economy consists of people who buy products and those who sell them.
All of us in this room are consumers - we buy products like food, clothes, games, cable for our TV’s, entertainment etc.

3. Economy
The rate at which people buy and the amount of goods/services that are produced/sold does not remain the same at all times – it varies!
As a result, sometimes economic conditions are good (wages are high, sales are great, production is high, and unemployment is low) and sometimes they aren’t so good (Sales are low, wages are low, production is low, unemployment is high)

4. Economy
The way that our economy goes from Boom (Prosperous) to Bust (Depression) is called the Business Cycle;
it has 4 cycles AND can be found on page 181 in your textbook (handout)

5. Business Cycle Includes four stages: Prosperity Recession
Trough / Depression
Recovery

6. Business Cycle
1920s = BOOM/Prosperity stage  people are willing to take monetary risks

7. Business Cycle
Recession  business is slowing down, companies have produced more goods than they can sell = have to lay off workers and those workers don’t have money to buy things = sales fall

8. Business Cycle
Depression (BUST) 1930s  layoffs = unemployment goes up, business go bankrupt
“A recession is when a neighbour has to tighten his belt. A depression is when you have to tighten your own belt. And a panic is when you have no belt to tighten and your pants fall down.” – T.C. Douglas (Page 182)

9. Business Cycle
Recovery – there is a shortage of goods that people want or need and production must go up, thus, more people are hired and they have money to spend etc.

10. THE END 