Factors Affecting the U.S. Economy Miss Smith 7th Grade Civics *pgs. 561-564 (21.2)

Stages of the Business Cycle Stage 1: Expansion Stage 2: Peak Stage 3: Contraction Stage 4: Trough What stage of the business cycle generally follows a trough? An expansion

Influences on the Business Cycle Business Investment Money and Credit Public Opinion International Events What factors might influence public opinion about the economy? Whether people have high-paying, secure jobs; whether many inexpensive goods are available; current events; the actions of businesses or the government

Predicting the Business Cycle Leading indicators- signs that come before major changes in the business cycle Coincident indicators- signs that show economists how the economy is doing at the present time Lagging indicators- economic signs that follow major changes in the business cycle In what ways do leading, coincident, and lagging indicators help economists understand the economy? Help predict future economic changes; coincident: tell whether an upturn or downturn has begun; lagging: help determine how long the current phase of the business cycle may last

Human and Capital Resources *Do NOT write Why might some American companies want to open factories in foreign countries? Why might a company choose to remain in the United States and hire American workers? To reduce labor costs and increase profits It might need to be in a certain location to provide a good or service, needs skills that American workers have, or wish to help provide jobs to American workers

Current Events and the Economy *Do NOT write How did the September 11 attacks affect the American economy? In what ways can weather affect the economy? They affected many businesses in NYC, caused the NYSE to close, and hurt the airline industry Hurricanes can disrupt crude oil and gasoline production. Hot or cold weather might change the demand for certain products and services, such as air conditioners or snow removal