1. Warm Up – May 10 Answer the following questions on a post it:
1. What is fiscal policy? Who determines it?
2. What is the federal budget? What does the federal budget authorize?
3. What is the difference between expansionary and contractionary policies?
4. What are the benefits of decreasing taxes and increasing spending?
5. What are the benefits of increasing taxes and decreasing spending?
6. How do we know if the economy is good or bad?

2. UNIT 7: The ECONOMY
Measuring the Economy

3. Four Ways to Measure the Economy
1. Gross Domestic Product (GDP)
2. Unemployment Rate
3. Inflation
4. Stock Market

4. 1. Gross Domestic Product (GDP)
Measure of the economy’s output.
Dollar amount of all final goods and services produced in a country in a year.
all of the money spent on items bought and sold in the country goes into GDP.
In times of expansion, GDP increases.
In times of contraction, GDP decreases.

5. Gross Domestic Product (GDP)
Recession- takes place when GDP goes down for at least 6 months.
Depression is a recession that lasts for an extended period of time

6. UNEMPLOYMENT RATE
If unemployment is high, typically the economy is struggling.
The unemployment rate is the % of people in the civilian workforce that are not working but are actively looking for work.
The civilian workforce includes:
All civilian (non-military) people who are actively seeking work.
All people 16 or older, who are actively seeking work.
About ½ the people in the U.S. are part of the workforce.

7. UNEMPLOYMENT RATE
If you chose not to work, you are not included in the unemployment rate.
There is always round 4-5% unemployment because there will always be people changing jobs, moving, graduating and looking for a job.
Current Unemployment Rate– 3.7% (6.3 million people)
Highest Unemployment rate ever – 25% (Great Depression)
Recently – 10% (Great Recession)

8. Inflation
A sustained increase in the level of prices over time. To track inflation, the government looks at about 400 commonly used products to see how the prices change-this is called the Consumer Price Index (CPI). Inflation decreases the value of our money. If prices go up, our money doesn’t buy as much

9. HOW DOES INFLATION IMPACT PRICES?
Year
Price
1965
$1000
1975 $
1985 $
1995 $
2005 $

10. STOCK MARKET
Not only does the stock market shows us stock prices, it also shows what investors expect to happen in the future.
BULL MARKET- If investors expect economic growth, stock prices will rise, b/c investors think the economy will be strong.
BEAR MARKET-Term used to describe when investors think the market isn’t going to be strong. As a result, stock prices will drop.

11. TOD – May 10
Answer the following questions on the same post it as the warm up:
What is GDP? What is the difference between a recession and a depression?
What does the unemployment rate measure? Why is the unemployment rate always 4-5%?
What is inflation?
Describe the difference between a bull market and a bear market