1. The business cycle

2. Read p. 114-5 and answer the questions 1. What fluctuates during a business cycle? 2. What tends to rise during an upturn? 3. What happens during a downturn? 4. What causes of business cycles are mentioned in the text? (2) 5. What do people do when economic times are good? 6. When does an upturn end? 7. What do people tend to do then? 8. What is investment linked to? 9. When do people invest? 10. How does a downturn end?

3. Define... 1. An upturn 2. A boom 3. A recession 4. a depression or slump. 5. a peak. 6. a trough. What is... 1. a negative growth?

5. Theories for the business cycle A) INTERNAL OR _________ THEORIES 1. These theories hold that business cycles are caused by... 2. A downturn begins when.... 3. People spend, and borrow money when… 4. People tend to spend less when… 5. When interest rates rise... 6. Companies only invest while... B) EXTERNAL OR _________ THEORIES 1. These theories hold that business cycles are caused by... 2. Schumpeter believes that… 3. Creative destruction means that...

6. MK, p. 116, Vocab. 2/2: synonyms Boost Depression Expand Output Decrease Excess Expenditure Recovery Stimulate Slump Grow Production Reduce Surplus Spending Upturn

7. MK, p. 116, Vocab. 2/3: opposites Boom Demand Exogenous Contract Peak Save Depression Supply Endogenous Expand Trough Spend

8. Reading p. 117 Read the text and underline the main ideas connected with classical economic theory, Keynesianism, and Monetarism. Which economic theory proposes the use of both fiscal and monetary policies? Which suggests using only one? Which one? Explain: “constant, non-inflationary growth in the money supply.” Keynesianist governmental intervention will “make the next swing in the business cycle even greater.” What was the dominant regulatory trend concering banking in the beginning of the 21st century?

9. Task MK, p. 118/ Comprehension