The business cycle
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The Business Cycle. Ch.3 - Glencoe. The Business Cycle. Economies go through ups and downs as a result of wars, foreign competition and changes in technology Business Cycle – rise fall of economic activity over time. Business Cycle Model. PROSPERITY. PROSPERITY. RECESSION. RECESSION.

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The Business Cycle

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The business cycle

The Business Cycle

Ch.3 - Glencoe


The business cycle1

The Business Cycle

Economies go through ups and downs as a result of wars, foreign competition and changes in technology

Business Cycle – rise fall of economic activity over time


Business cycle model

Business Cycle Model

PROSPERITY

PROSPERITY

RECESSION

RECESSION

(growth)

RECOVERY

(growth)

(slowdown)

(slowdown)

DEPRESSION

(lowest point)


Recession

Recession

Recession – economic activity slows down

Spending and demand for product decreases

Business produce less = need fewer employees

Unemployment rate increases = people spend less

Can affect only one industry, related industries, or spread to the entire economy

Ripple Effect – when a recession in one industry leads to an effect in another


Prosperity

Prosperity

Prosperity – is a peak of economic activity.

Unemployment is low

Production of goods and services is high

New businesses open

Wages are usually higher

High number of imports


Eras that changed the economy

Eras that Changed the Economy

The Era of Mass Production 1914 – 1995. World War I (WWI) was the first mechanized war. It created a demand for massive resources. By the end of WWI, Henry Ford had perfected the assembly line.

How did the assembly line change American society?


Depression

Depression

  • Depression - A deep recession that affects the entire economy and lasts for several years

  • High unemployment

  • Low production of goods and services

  • Spreads to related countries

  • Depressions are rare

    • Examples: “Black Tuesday” Great Depression 1929-1933


Recovery

Recovery

  • Recovery – a rise in business activity after a recession or depression

  • Production starts to increase

  • People go back to work and have money to spend

  • New demand for goods and services

  • News businesses open, but need to be innovative

    • Be on the edge of the competition to recover faster


Review

Review

Identify the four phases of the business cycle.

How does the ripple effect impact the economy?


Eras that changed the economy1

Eras that Changed the Economy

The Cyber Era, 1995 – present. The internet has changed business and consumer behaviors. Business is done anywhere in the world, 24 hours a day.

How has the Internet changed the way people do business?


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