1. The Shape of a Recession

2. Big Questions How are we doing? (Yes, again) Why do recessions happen? How does the government affect the economy (and you and me)?

3. Chapter 14: Economic Instability Section 1: The Business Cycle

4. The Business Cycle Phases: Recession, Expansion, Peak, Trough RGDP Time

5. The Business Cycle

6. Output Gap Link

7. The Business Cycle Business cycle = systematic ups and downs of real GDP 2 phases of biz. cycle: Recession begins at peak and ends at trough— peak/trough at least 6 mo’s apart Expansion is the recovery from a recession Severe recessions can become depressions.

8. Real GDP ‘75-’10

9. Directions: Color vertical stripes representing recession years. Color Key- Recession ______ Expansion white At the top of the graph, label the Peaks (P) and the Troughs (T). P

10. List of recessions

11. 16 Recessions Since 1919 That’s an average of one every 6 years. (They’ve become less frequent since 1919.)

13. Causes Businesses –By predicting recessions they can cause and/or prolong recessions! Consumers –cause “bubbles” (housing, etc.) –save money when they get scared. This makes recessions last longer!

14. II. Causes The tulip-bulb bubble.

15. II. Causes The dot-com bubble.

16. II. Causes Federal Reserve

17. U.S. Real Gross Domestic Product Great Depression World War II Oil Prices Quadruple/ Vietnam War Great Recession dot coms, 9/11 Iranian Revolution Fed Raises Interest Rates to Fight Inflation Double Dip Oil, debt, and bank reg’s “tight” monetary policy

19. Business Cycle Art Draw a business cycle and label it appropriately (peaks, troughs, expansions, recessions). Along the business cycle, draw pictures/people/symbols showing: –what’s happening in the economy. –how people are feeling at each stage. –what the government may be doing. –what businesses may be doing.

21. Real GDP ‘75-’10

23. % Change, Consumer Price Index

24. Green bars indicate beginning of recessions.

27. Directions: Color vertical stripes representing recession years. Color Key- Recession ______ Expansion white At the top of the graph, label the Peaks (P) and the Troughs (T). P

28. The business cycle, unemployment, and inflation. An Activity

29. Hayek, Keynes Rap Battle