2. Four Economic Shifts Early 1600s Colonists bartered, or traded, goods and services 1700s Farming was a common way of life Mid 1850s Industrial Revolution – industry based 1900s Information based economy

4. Gross Domestic Product The value of the goods and services it produced in a country in a given year The sum of goods and services sold to businesses, consumers, the government, and other countries

6. Definition The level of material comfort as measured by goods and services that are available The standard of living refers to the amount of goods and services people can buy with the money they have. The more goods and services produced per person, the higher the standard of living

7. Determining Standard of Living  Income  Quality and availability of employment  Poverty rate  Affordable “or free” access to quality healthcare  Inflation rate  Political and religious freedom  Climate and safety  National economic growth  Cost of goods and services  The standard of living is closely related to quality of life

8. Example The United States has a high standard of living because of its productive workforce.

10. Types of Unemployment Frictional Caused by changing jobs, is temporary with little effect on the economy Seasonal Workers are only needed part of the year Structural New technology replaces workers, requiring new technology, or companies merge and eliminate jobs Cyclical The entire economy slows down

12. Basics… Inflation is a general increase in the price level of goods and services over a period of time. One’s buying power decreases with inflation Causes may include: scarcity of resources; increased cost of raw materials, expenses, and salaries; too much money in circulation

13. Rate of Inflation Calculator  http://www.bls.gov/data/i nflation_calculator.htm http://www.bls.gov/data/i nflation_calculator.htm Price + year = the same buying power as ____ in year For example: $60 in 1980 has the same buying power as $169.63 in 2013

14. Important Economic Indicator Speed of changing prices in the economy. Measured by the CPI (Consumer Price Index). Some inflation is actually good for the well- being of the economy. Generally, a healthy inflation rate is about 2% (a core inflation rate).

15. Deflation The general decrease in the price of goods and services When the supply of goods is greater than demand

17. Terms National Debt-The total amount of money a government owes Budget Deficit-when the government spends more on programs then it collects in taxes. Budget surplus-When a governments revenue exceeds its expenditures during a one year period.

18. Current Debt total The United States’ debt total is over 17 trillion and counting and it will probably never be eliminated completely. http://www.usdebtclock.org/#

19. Section 3.2

20. The Business Cycle Economies naturally go through ups & downs. The business cycle is the rise and fall of economic activity over time. In the United States… Economic “slumps” in 1930s, 50s, 70s, 2000s Fall in economic activity & rise in unemployment Slumps followed by new waves of increased productivity and increased GDP

21. Stages of the Cycle Prosperity Recession Depression Recovery

22. Prosperity Also known as the “peak” Higher wages, more jobs available, higher demand for goods/services Unemployment is low, GDP is high People are spending!

23. Recession Economic activity slows down – less production of goods, downturns in industry GDP decreasing, unemployment increasing People start to save!

24. Depression Deep recession that lasts for years and affects the entire economy Unemployment is high, GDP is low Government starts trying to “stimulate” the economy People are saving!

25. Recovery Also known as “expansion” Rise in business activity after a recession or depression Innovation occurs – business start bringing out new products & services Unemployment decreasing, GDP increasing People start to spend!

26. Recession Article “Entrepreneurship in the Midst of Recession” Read the article and complete the entrepreneur chart, then answer the discussion questions in full sentences.