1. Agenda- 11/30 Review tests Current Events Set up notebooks
Ch. 13 Sec. 1-2 Lecture (RS)
WS and Book ?’s (LS)
HW: Complete unfinished work
GRAB A TEXTBOOK!

2. Unit 4 – Business Cycles: Economic Instability
(Start Unit 4 in your notebook)
Ch. 13, Sect. 1-2

3. INFLATION
Inflation - A sustained rise in the general level of prices.
REAL GDP
Real GDP is GDP with inflation removed.

4. How do we measure Inflation?
The Consumer Price Index (CPI)
a # used to calculate in the avg. price level for a # of market basket items consumed by a typical urban family.
80,000 items in 364 categories, sampled from 85 geographical areas
A price index is a number that compares prices in one year with some earlier base year.
Prices & Inflation
4:49)

5. Business Cycles and Fluctuations
Economic growth is interrupted by business cycles (systematic ups and downs of real GDP)

6. Phases of the Business Cycle
Expansion –a productive and increasing period in business activity. (a “boom”)
Recession–a period where business activity declines and GDP actually decreases for two consecutive quarters (6 months)
Depression–acute shortages, high unemployment, excess capacity, GDP decreases four or more quarters.

7. Phases of the Business Cycle (cont)
“W” - marks the spot where the expansion stops increasing. Also known as a PEAK.
Section “X” - Contraction: Economy reaches it peak and drops into a trough.(recession / slump)

8. Phases of the Business Cycle (cont)
“Y” – marks the spot where the contraction stops decreasing. Also known as a TROUGH.
Section “Z” - Second phase is Expansion
(period of Recovery from a recession)
Expansion continues until it reaches its peak.

9. Trend line: a line showing the steady growth path of the economy
Trend line: a line showing the steady growth path of the economy. Business Cycle Summary video but play the one at the bottom ; )
Business Cycles Review Video quick (play now)

10. Causes of Inflation Demand-Pull – excessive demand “pulls” prices up
Cost Push – rising input costs “push” up the cost of goods. Manufacturers raise prices to recover the costs

11. Causes of fluctuations in the Business Cycle
Changes in Capital Expenditures: When economy is expanding, businesses invest in capital goods; eventually, they stop investment and recession/layoffs result.
Inventory Adjustments: Businesses cut back on inventories at the first sign of recession; Fluctuates real GDP.

12. Causes continued…
Monetary Factors: credit and loan policies of the Federal Reserve; easy loans and low interest rates lead to investment.
External Shocks: increase in oil prices, wars, or international conflicts

13. Homework (left-side) Guided Reading WS – Ch. 13, Sec. 1 & 2
On the back of WS:
p. 359:
Answer # 1 (first 9 terms)
& #2 – 3 ; )