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Economic Ups and Downs Chapter 6.1. 1991-2001  This was the longest continuous period of economic growth the US has ever seen. During this ten year span:

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Presentation on theme: "Economic Ups and Downs Chapter 6.1. 1991-2001  This was the longest continuous period of economic growth the US has ever seen. During this ten year span:"— Presentation transcript:

1 Economic Ups and Downs Chapter 6.1

2  This was the longest continuous period of economic growth the US has ever seen. During this ten year span:  Those who wanted to find jobs could  The unemployment rate was the lowest in history  The stock market soared to an all time high  Prices of good and services did not increase significantly.

3  This period became the worst economic decline in hisotry. During this time:  Many americans could not find employment  Many were left homeless and hungery  Many factories, stores and business closed.

4 Business Cycles  A business cycle it the up and downs of the economy. There are four stages to the business cycle. They are as follows:  Contraction-During this stage business activity slows down. IF this stage last to long the economy could head into a recession.  Trough—this is the lowest point in the cycle, where business activity levels off.  Expansion—The economy begins to recover. People spend more money.  Peak-This period of prosperity marks the highest point of the cycle. At some point the peak stage a contraction occurs starting the cycle over again.

5 Recession  This is a period of significant decline in the economy. These recessions usually las from 6 month to a year.  During this time the economy produces much more then consumers can use. Because of this business profits go down requiring businesses to cut manufacturing and layoff and fire workers.  Consumers don’t spend money.

6 Depression  This is the downward spiral from a recession can lead to a depression.  A major showdown (depression) is longer lasting and more serious then a recession.  Demand decreases sharply, prices plummet, many business fail and unemployment soars.

7 Inflation  When the economy grows to rapidly—prolonged rise in the prices of goods and services. It often occurs during periods of rapid growth and expansion.  Inflation affects consumers by reducing their purchasing powers. Money buys fewer things.  Because inflation affects consumers who borrow, lend or invest money, they need to consider how it impacts interest rates. The fee paid to use someone else’s money over a period of time.  The housing market!!!!!

8 Factors Affecting Ups and Downs  Consumer Confidence—If people feel the economy is facing an upward swing, they spend more. If they feel gloomy about the future then spending is back.  Technological innovation—many business spring out of new technological innovations. These new innovations create new markets and can transform the economy, the workplace and the culture.

9 Factors Affecting Ups and Downs Continued….  Government policies- Tax cuts, spending and the regulation of the money supply can cause the changes in the business cycle.  War during times of war the demands for many goods and services associated with the war effort increases. War is associated with economic expansion.

10 Measuring the Economy’s Health  Economic indicators—Measure production, employment and inflation.  Gross Domestic Product—Commonly known as the GDP, it is the total dollar value of goods and services, produced in a county during the year.  Unemployment rate—this is the percentage of the civilian labor force that is without a job but, is actively seeking employment. Full employment means less than 5.5 percent.  Consumer Price Index—measures the change in prices over time of a specific group of goods and services.

11 Connection of Local, National, and Global Economics  Climate changes, natural disaster, population shift, the availability of works, local government policies, and the strength of local businesses are some of the many factors that contribute to economic changes.  The economies of every nation are becoming more connected. A recession in the United States can trigger economic slowdowns throughout the world.


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