Economic Indicators

1. If you put $200 into a savings account that had a 2% annual interest rate, how much money would you have after 1 year?

a. $200 b. $202 c. $204 d. $208

2. Who or what backs the money that circulates throughout the country now?a. Gold b. Silver

c. The government d. The paper money itself

3. An ATM account and Checking account are examples of what?

a. Demand deposit b. Time Deposit c. FDIC d. Barter

4. Who is most likely to make a decision that will affect MONETARY policy and interest rates?

a. Congressmen b. The President c. A Mayor d. The Fed

5. If there is too much money in circulation, the government should use a ____________ monetary policy because they will ______________ interest rates.

a. Tight, raise b. Tight, lower

c. Loose, raise d. Loose, lower

• UNIT 2 Review

____6. Which power of the legislative branch restricts the power of both the executive and judicial branches?

• a. taxation b. financing the army and navy

c. impeachment d. declaring war

____7. In what ways can the president influence the laws passed by Congress?

a. by suggesting laws to be passed by Congress b. by appointing Supreme Court judges

c. by saying what the law is d. by passing new laws

____8. Which choice best summarizes the powers of the executive branch?

a. the executive branch reviews the laws to make sure they follow the constitution

b. the executive branch makes the laws and confirms federal appointments

c. the executive branch vetoes laws from Congress

d. the executive branch carries out the laws through the presidency and executive branch departments

____9. Under Article III ,which branch has the power to declare laws unconstitutional?

a. Executive branch b. Congress

c. Judicial branch d. Legislative branch

____10. Which of the following best describes why Congress has two branches?

a. to check the power of the president b. to give more power to the large states

c. to balance power between small and large states d. to pass laws more quickly

Goals

Identify the different parts of the business cycle.

Determine what part of the business cycle a nation is in based on different economic indicators.

• What are some events that occur in cycles (No! Not bicycles)

• Finish the statement: “what goes up, must come __________.”

Economic Indicators• Indicators help us tell how well an economy is doing.

They include…– Unemployment: people who can work but are without

employment– Inflation (CPI): the general increase in prices over time.

Inflation often occurs during expansion because consumers have more $ to spend causing demand to increase.

– PPI (producer price index): Used by producers to see how much the goods/services they need for their businesses will cost.

– Productivity/GDP: total of all the final products produced in a country

– Stock Market (bull vs bear market): where shares of corporations are bought and sold.

Employment• Unemployment: measures the people

who can work but do not have jobs.

• Full Employment: when all people who can work have jobs

• Underemployment: having a job which you are overqualified and underpaid for.– Ex: PhD. working at McDonalds

GDP: Gross Domestic Product

• Total value of all the final products that are produced within a country in one year.

• Final products: a good sold to a user (as opposed to all the ingredients of that product). The car, but not the steel or the rubber that went into making it

Per Capita GDP

Per Capita GDP

The darker the blue, the better Per Capita GDP. How’s the US doing?

CPI or the Consumer Price Index

• Measures inflation rates for the nation’s economy– Inflation: the general

rise in price of an item over time.

• Is determined by measuring the price of a standard group of goods meant to represent the “market basket” of a typical consumer.

Market Basket might include cost of….•Food and drinks

•Medical care•Housing•transportation

How much do these cost?

In March Then

again

in May.

Market Basket might include cost of….•Food and drinks

•Medical care•Housing•transportation

The Stock Market

• Where shares of corporations are bought and sold.– Dividends: money earned by your share of a

stock– Capital Gains: money earned when you sell

your stock

• Bull Market: Rising

• Bear Market: falling

Bear vs. Bull Market• The Chicago Bears just

aren’t that good and often FALL, just like a bear market.

• When Michael Jordan was on the Chicago Bulls, he would always rise up to dunk just like the rising market.

The Business Cycle

Peak

Contraction Trough

Expansion

Contraction (a.k.a. “Recession”)• Economy is DECLINING

– Bear market – GDP down

• Unemployment is RISING

Trough (a.k.a. “Depression”)• Economy is at its LOWEST

– GDP at LOWEST

• Unemployment is at its HIGHEST– EX: the Great Depression 1929-1939

Stock Market Crash1929, “Black Tuesday”

Run on the banks! NO FDIC

Wall St.

The Great Depression

The Great Depression1933: unemployment=25%Today: unemployment = 8.6%

Expansion• Economy is IMPROVING

– Bull market– Inflation (CPI rises)– GDP up

• Unemployment is FALLING

Peak (a.k.a. “Boom”)• Economy is at its HIGHEST

– GDP is at its HIGHEST

• Unemployment at its LOWEST

EX: the dot com boom in the 1990s

The Business Cycle

___________

___________

___________ ___________

Decide whether each scenario represents a Peak, Trough (Depression), Contraction (Recession) or Expansion

• 1. America’s Dow Jones (stocks of the 30 largest American Companies) has fallen for the 60th day in a row. Unemployment rose from 5% to 7% from January to May. The GDP declined for the 5th consecutive month this year. What part of the business cycle is America in?____________________

Decide whether each scenario represents a Peak, Trough (Depression), Contraction (Recession) or Expansion

• 2. Russia’s stock market crashes. The value of the Russian Ruble (Russia’s currency) sinks to its lowest level in a decade. Millions of Russians find themselves unemployed as the unemployment rate rises to 25%. The price of necessary goods skyrockets and thousands of Russians starve, unable to afford bread.

• What part of the business cycle is Russia in?____________________

Decide whether each scenario represents a Peak, Trough (Depression), Contraction (Recession) or Expansion

• 3. China’s stock market has been on the rise for 2 straight years. Chinese productivity has increased steadily each year as countries around the world buy more and more cheap Chinese goods. China’s GDP reached its highest point. China’s unemployment rate has steadily declined for the past 10 years in a row. Today it is at its lowest rate ever (4.2%). The price of Chinese goods has declined making them affordable to the majority of Chinese people.

• What part of the business cycle is China in?____________________

Decide whether each scenario represents a Peak, Trough (Depression), Contraction (Recession) or Expansion

• 4. After a recession the French economy has been on the rise. French productivity has risen a little each year. France’s unemployment rate has steadily declined by .5% from January to May. France’s GDP was up for the second month in a row.

• What part of the business cycle is France in?____________________

Business Cycle Art

• Fold your paper into quadrants

• Label each quadrant one part of the business cycle.

• Draw the Business cycle

• Include information about what happens in each part.

The Business CyclePeak

Contraction Trough

Expansion

•Economy is at its HIGHEST•Unemployment at its LOWEST

•Economy is at its LOWEST•Unemployment is at its HIGHEST

1. The U.S. Bureau of Labor Statistics annually produces the consumer price index (CPI), which measures average price changes in relation to prices in a chosen base year. What is the CPI most likely measuring?

a. inflation and deflation

b. imports and exports

c. employment and unemployment

d. inputs and outputs

• 2. In the business cycle, recessions, downturns, downswings, and liquidations are also known as

a. Inflation

b. contractions

c. Prosperity

d. expansions

• 3.  What is another term for expansion in the business cycle?

a. Downturn

b. Recovery

c. Trough

d. Surplus

• 4. The steady rise in prices measured by an index of the cost of various goods and services is known as

a. GDP

b. Per capita GDP

c. Inflation

d. Deflation

5. Which term describes the total value of goods and services produced in a country in a given year?

a. GDP

b. CPI

c. Debt

d. Recession

6. What historical event is an example of an economic trough in the United States

a. Rockefeller’s Oil

b. Great Depression

c. Cotton Gin

d. Creation of the UN

7. Which term is used to describe the inability to find employment by workers who are able and willing to work?

a. Underemployment

b. Full employment

c. Unemployment

d. GDP

FINAL EXIT TICKET QUIZ

1. DRAW THE SNAKE GRAPH BELOW2. LABEL “EXPANSION” “RECESSION” “TROUGH” AND “BOOM”3. AT EACH PLACE, EXPLAIN HOW GDP IS DOING4, AT EACH PLACE EXPLAIN HOW UNEMPLOYMENT IS DOING