1. The periodic and cyclical ups and downs of the economy
Business Cycle
The periodic and cyclical ups and downs of the economy

2. -phase where the economy is growing
Expansion Period
Expansion Period
-phase where the economy is growing
Gross Domestic Product increases from year to year
-amount of goods produced?
Output of goods and services increases – people expect to make more
-number of jobs produced?
More goods and services means more jobs for people
-number of business starts
More businesses starting – expect to produce more
What happens in the expansion period?
_____________________________
Why must the government be careful during the expansion period?

3. -phase where the economy has reached its peak of growth
Peak Period
Peak Period
-phase where the economy has reached its peak of growth
Everything is at its best possible level
-amount of goods produced?
-number of jobs produced?
-number of business starts
What happens in the peak period?
_____________________________
Why must the government be careful during the peak period?

4. -phase where the economy is starting to decline from its peak activity
Contraction Period
Contraction Period
-phase where the economy is starting to decline from its peak activity
Gross Domestic Product getting less from year to year
Could lead to a recession
-amount of goods produced?
Demand goes down, which causes supply to decrease
-number of jobs produced?
Firms not selling as much, number of jobs decrease
-number of business starts
Less new businesses – do not expect to make money
What happens in the contraction period?
_____________________________
Why must the government be careful during the contraction period?

5. -phase where the economy has reached its lowest point
Trough Period
Trough Period
-phase where the economy has reached its lowest point
All are at the lowest possible levels, could lead to depression
-amount of goods produced?
-number of jobs produced?
-number of business starts
What happens in the trough period?
_____________________________
Why must the government be careful during the trough period?

6. Standard of Living -Standard of Living
-a measure of how well a person lives as well as the amount of free time they have
Make sure all Americans have enough goods and services
Compare ourselves to other nations
-Gross Domestic Product
-the value of all goods and services produced in a nation in a given year
Measures quantity, not quality
-Why do we compare GDP with previous years?
To see whether or not the economy is growing and to decide what the government should do to help

7. Inflation Concerns
-Inflation
-a general increase in the cost of goods and services
Rise in prices
-Why is inflation a bad thing for the economy?
Reduces purchasing power of money and alters people’s decisions
-Consumer Price Index
400 commonly-used items sampled by the government to determine prices
-Controlling Inflation
Federal reserve