HOLT, RINEHART AND WINSTON1 CIVICS IN PRACTICE HOLT Chapter 20 Economic Challenges Section 1:The Business Cycle The Business CycleThe Business Cycle Section 2:Coping with Economic Challenges Coping with Economic ChallengesCoping with Economic Challenges Section 3:Labor and Management Labor and ManagementLabor and Management

CIVICS IN PRACTICE HOLT HOLT, RINEHART AND WINSTON2 The Main Idea The economy has periods of uneven growth called business cycles. Sometimes the economy grows quickly, but other times it may grow very slowly or even shrink. The worst point in the business cycle in the United States was the Great Depression. Reading Focus   What are the different parts of the business cycle?   What was the Great Depression?   What was the government’s response to the Great Depression? Section 1:The Business Cycle

CIVICS IN PRACTICE HOLT HOLT, RINEHART AND WINSTON3 Different parts of the business cycle:  Expansion  Peak prosperity  Contraction or recession  Trough or depression  Expansion Section 1:The Business Cycle

CIVICS IN PRACTICE HOLT HOLT, RINEHART AND WINSTON4 Old theories of the business cycle prior to the Great Depression:  Business cycle should be left alone: problems cure themselves.  Recessions could not last long: workers would accept lower wages, thus lowering costs of production.  Expanding businesses would help other businesses expand. Section 1:The Business Cycle

CIVICS IN PRACTICE HOLT HOLT, RINEHART AND WINSTON5 The Great Depression and the government’s role:  New Deal—designed to provide jobs and create financial stability.  Civilian Conservation Corps—young people were to restore natural resources  FDIC and SEC created to insure funds and inhibit fraud Section 1:The Business Cycle

CIVICS IN PRACTICE HOLT HOLT, RINEHART AND WINSTON6 The Great Depression and the government’s role: (continued)  Social Security System set up to provide funds for retirees  Unemployment compensation established Section 1:The Business Cycle Government intervention in the economy remains a matter of dispute.

CIVICS IN PRACTICE HOLT HOLT, RINEHART AND WINSTON7 Question: What are the different parts of the business cycle? SECTION 1 The Business Cycle contraction troughexpansion peak

CIVICS IN PRACTICE HOLT HOLT, RINEHART AND WINSTON8 The Main Idea Problems such as inflation, unemployment, and recession pose serious challenges to the economy. The government responds to these problems by changing its monetary and fiscal policies. Reading Focus   What kinds of problems can occur in the economy, and what causes them?   How can the government address these economic problems?   How can citizens help to improve the economy? Section 2:Coping with Economic Challenges

CIVICS IN PRACTICE HOLT HOLT, RINEHART AND WINSTON9 Economic problems and their causes:  Inflation—prices increase faster than wages;  Unemployment—unemployed workers cannot pay bills or purchase goods  Recession—production, spending, and consumer demand decline  Money and loans—too much money in circulation leads to inflation Section 2:Coping with Economic Challenges

CIVICS IN PRACTICE HOLT HOLT, RINEHART AND WINSTON10 Economic problems and their causes: (continued)  Government and consumer spending—over- borrowing reduces savings, increases debt; helps raise prices  Productivity—foreign productivity hurts American businesses; contributes to unemployment Section 2:Coping with Economic Challenges

CIVICS IN PRACTICE HOLT HOLT, RINEHART AND WINSTON11 The government addresses economic problems through  Changes in fiscal policy—in a recession, government may lower taxes and increase government spending.  Changes in monetary policy—in a recession, the Federal Reserve may increase the money supply or lower interest rates.  Actions may be reversed in boom periods. Section 2:Coping with Economic Challenges

CIVICS IN PRACTICE HOLT HOLT, RINEHART AND WINSTON12 Citizens can aid the economy by  Increasing savings—consumer savings give banks more money to lend to business.  Reducing credit debt—reduced debt can lead to more savings.  Buying American-made products, which preserves and creates jobs in America.  Increasing productivity—efficient management and workers aid business and may increase wages. Section 2:Coping with Economic Challenges

CIVICS IN PRACTICE HOLT HOLT, RINEHART AND WINSTON13 Question: How does the government address economic challenges? SECTION 2 Changes to the fiscal policy: Changes to the monetary policy: The Government’s Response to Economic Challenges  reduce taxes  buy more goods and hire more people  give larger payments to unemployed, poor, and older citizens  decrease wasteful spending  increase money supply during a recession by reducing interest rates or by buying government bonds  raise taxes and reduce spending during a boom period  raise interest rates during a boom period

CIVICS IN PRACTICE HOLT HOLT, RINEHART AND WINSTON14 The Main Idea Workers formed labor unions to force employers to improve working conditions and wages. Businesses and unions have had conflicts over the years, so the federal government passed laws dealing with labor relations. Reading Focus   What led to the rise of factories in the 1800s?   What are labor unions?   What laws have been passed to ease relations between labor and management?  ?  What is the status of labor unions and labor relations today? Section 3:Labor and Management

CIVICS IN PRACTICE HOLT HOLT, RINEHART AND WINSTON15 The rise of labor unions in the 1800s:  Large factories used machines and employed hundreds of workers.  Factory managers and owners had little contact with workers.  Heavy immigration led to too many available workers. Section 3:Labor and Management

CIVICS IN PRACTICE HOLT HOLT, RINEHART AND WINSTON16 The rise of labor unions in the 1800s: (continued)  Workers were forced to accept long working days, low wages, and harsh conditions.  Workers organized unions to improve conditions.  Collective bargaining was used to reach agreements with employers. Section 3:Labor and Management

CIVICS IN PRACTICE HOLT HOLT, RINEHART AND WINSTON17 Methods of negotiation and major labor laws:  Workers’ methods: strikes, picketers, job actions  Employers’ methods: blacklists and lockdowns  Right-to-work laws—no one is forced to join a union  1935—National Labor Relations Act or Wagner Act  1947—Labor-Management Relations Act or Taft- Hartley Act  1959—Landrum-Griffin Act Section 3:Labor and Management

CIVICS IN PRACTICE HOLT HOLT, RINEHART AND WINSTON18 The state of labor relations today:  Union leaders know companies must make profits to ensure jobs.  Companies know workers must have suitable conditions and reasonable wages.  Modern unions cooperate with companies to run efficient businesses.  Compromises help settle strikes when they occur. Section 3:Labor and Management

CIVICS IN PRACTICE HOLT HOLT, RINEHART AND WINSTON19 The state of labor relations today: (continued)  Mediators make nonbinding recommendations to end a strike.  Arbitrators make binding decisions to end a strike. Section 3:Labor and Management

CIVICS IN PRACTICE HOLT HOLT, RINEHART AND WINSTON20 Question: What is the status of labor relations today? SECTION 3 Labor Relations Today use arbitration to settle disputes use mediation to solve disputes use more cooperation between employers and unions use collective bargaining to settle disputes

CIVICS IN PRACTICE HOLT HOLT, RINEHART AND WINSTON21 Chapter 20 Wrap-Up 1.What was government’s response to the Great Depression? 2.How did the government’s role in the economy change during the Great Depression? 3.What measures does the Federal Reserve take to control the amount of money in the economy, and why does it do so? 4.How can the action of consumers affect the economy? 5.What first caused workers in the United States to form labor unions? 6.What methods do unions and employers use to try to achieve their goals? 1.What was government’s response to the Great Depression? 2.How did the government’s role in the economy change during the Great Depression? 3.What measures does the Federal Reserve take to control the amount of money in the economy, and why does it do so? 4.How can the action of consumers affect the economy? 5.What first caused workers in the United States to form labor unions? 6.What methods do unions and employers use to try to achieve their goals?