On your warm up/exit ticket sheet: What do you think is the most traumatic experience a person could go through in their entire life? Be ready to share.
Frictional, Structural, or Cyclical?
1. A recent college graduate who is seeking her first job 2. A former steelworker for a firm that has closed an obsolete plant 3. A worker who has quit his job to move to a new town to be with his family 4. A carpenter who is laid off when housing construction declines because of high interest rates 5. An autoworker who is laid off because auto sales are down 6. A homemaker who decides to seek work outside the home and begins the job search 7. A telephone operator whose job is eliminated when the phone company installs new computer-based switching equipment 8. An oil worker who is laid off because the demand for petroleum declines
Today’s LEQ: How can we determine the overall health of the economy?
The Business Cycle is a period of macroeconomic expansion followed by a period of contraction, or decline Represents major fluctuations (not day-to- day ups and downs)
Economists follow a country’s GDP to predict business cycles GDP is the total value of all final g/s produced in an economy and helps to measure our economic well-being
Shows fluctuations: rising and falling of output in relation to potential output Expansion: Economic growth as marked by rise in GDP Contraction: Economic decline as marked by falling GDP Peak: Point at which output starts to decline (start of recession) Trough: Point at which output starts to increase (end of recession) The period between the trough and the next peak is called the recovery period or expansion Recession: two consecutive quarters (six months) of negative growth in real GDP Depression: deep recession with especially high unemployment and low output
We are always at some point in the business cycle Cycles may last less than a year or continue for many years Free enterprise systems are subject to business cycles because economic decisions are made by ind’ls and businesses acting in their own best self interest Government plays a role in attempting to prevent wild swings in economic behavior
Where we are in a given business cycle affects our lives every day Available jobs? Prices rising?