Aim: What are the fundamental components of the business cycle? Do Now: Current Event Presentations Business Cycle Video and Questions Homework: Continue working on your Current Event Presentations – refer to schedule for due date. Comparing Economic Systems Assignment due: Friday, January 8, 2016 – Quiz Grade

Business Cycle Video 1.What is the business cycle? 2.Explain the difference between expansion and contraction? 3.According to the National Bureau of Economic research, since 1945, how long is the average expansion period? How long is the average contraction period? 4.Why do you believe periods on contraction tend to be shorter than periods of expansion? Cite evidence from the video.

Phases of the Business Cycle: The Business Cycle is a cycle or series of cycles of economic expansion and contraction. Growth trend overtime is consistency going up over an extended period of time.

Phases of the Business Cycle: 1. Depression – the through of the business cycle which includes business failures, low levels of spending and high unemployment over an extended period of time.

Phases of the Business Cycle: 2. Recovery – expansion in the economy with more jobs becoming available, more consumer spending, and growth in businesses.

Phases of the Business Cycle: 3.Prosperity – the peak of the business cycle which includes businesses succeeding, large consumer spending and unemployment is low over an extended period of time.

Phases of the Business Cycle: 4. Recession – downturn or contraction in the economy with large job lay-offs, lowered consumer spending, and a decline in business growth.

Four Variables Affecting The Business Cycle: 1. Business Investment - When the economy is expanding, sales and profit keep rising, so companies invest in new plants and equipment, creating new jobs and more expansion. In contraction, the opposite is true

Four Variables Affecting The Business Cycle: 2. Interest Rates and Credit - Low interest rates, companies make new investments, adding jobs. When interest rates climb, investment dries up and less job growth

Four Variables Affecting The Business Cycle: 3. Consumer Expectations - Forecasts of an expanding economy fuels more spending, while fear of a recession decreases consumer spending

Four Variables Affecting The Business Cycle: 4. External Shocks - such as disruptions of the oil supply, wars, or natural disasters greatly influence the output of the economy

Identify the phase of the business cycle described in each statement below. _______________ 1. Stores continue to place large orders to keep up with growing demand. _______________ 2. Business surpluses accumulate because consumer demand has fallen off. _______________ 3. Depression prices lead to increased demand for certain goods and services. _______________ 4. Consumers begin to cut back on spending for luxuries such as entertainment. _______________ 5. There is a boom in vacation real estate investments. _______________ 6. Car dealers lower prices and offer rebates to attract customers. _______________ 7. A large number of major corporations and banks go out of business. _______________ 8. New high tech businesses begin hiring many of the unemployed. _______________ 9. The number of banks loaning money to prospective homeowners reaches an all-time high. _______________ 10. Stock prices plummet and unemployment is widespread.

Closing Question How does the business cycle impact society? Give a specific example from today’s discussion.