business cycles peaks and troughs… expansion and recession, the ups and downs of economic activity
TRANSCRIPT
Business Cycles
Peaks and Troughs…
Expansion and Recession, the ups and downs of economic activity.
Expansion and RecessionExpansion and Recession
• ExpansionExpansion - A period of investment, production and - A period of investment, production and increases in sales and business activity.increases in sales and business activity.
• ““PeakPeak” – the point where expansion stops, and overall ” – the point where expansion stops, and overall business activity begins to slow.business activity begins to slow.
• RecessionRecession – a period of decline in economic activity – a period of decline in economic activity marked by a reduction in real GDP for 6 months – (2 1/4s).marked by a reduction in real GDP for 6 months – (2 1/4s).
• ““TroughTrough” - The point where real GDP stops going down.” - The point where real GDP stops going down.
““Fueling” ExpansionFueling” Expansion
• How could the following factors cause US businesses to expand?
Foreign Investment
The Government
Competition
Consumers
World Events
Graphs of Peaks and Troughs
Go to Page 311
in the textbook, to investigate the
nature of business activity in the US.
Predicting Business CyclesPredicting Business Cycles
Index of Leading Economic Indicators
Average workweek (manufacturing)
Initial unemployment claims
New orders for consumer goods
Vendor performance (Purchasing Managers)
Plant and equipment orders
Building permits
Change in unfilled durable orders
Stock prices (S&P 500)
Real M2 (Money , Chk. & Sav., some CDs, $ funds )
Index of consumer expectations (Confidence)
Homework – Due 5/2Homework – Due 5/2Posted on the Web Site Under the Calendar for 4/30
Chapter 15 Review – Page 390
Applying Economic Concepts
Go to: www.conference-board.org/economics/bci/pressRelease_output.cfm?cid=1
Scroll down to “Leading Indicators”, and read the report, then, answer Question # 1 above.