The Great Depression

1. The Great Depression The Business Cycle

2. Economy • Economy = the production and consumption of goods and services of a community • So, an economy consists of people who buy products and those who sell them. • All of us in this room are consumers - we buy products like food, clothes, games, cable for our TV’s, entertainment etc.

3. Economy • The rate at which people buy and the amount of goods/services that are produced/sold does not remain the same at all times – it varies! • As a result, sometimes economic conditions are good (wages are high, sales are great, production is high, and unemployment is low) and sometimes they aren’t so good (Sales are low, wages are low, production is low, unemployment is high)

4. Economy • The way that our economy goes from Boom (Prosperous) to Bust (Depression) is called the Business Cycle; • it has 4 cycles AND can be found on page 181 in your textbook (handout)

5. Business Cycle • Includes four stages: • Prosperity • Recession • Trough / Depression • Recovery

6. Business Cycle • 1920s = BOOM/Prosperity stage people are willing to take monetary risks

7. Business Cycle • Recession business is slowing down, companies have produced more goods than they can sell = have to lay off workers and those workers don’t have money to buy things = sales fall

8. Business Cycle • Depression (BUST) 1930s  layoffs = unemployment goes up, business go bankrupt • “A recession is when a neighbour has to tighten his belt. A depression is when you have to tighten your own belt. And a panic is when you have no belt to tighten and your pants fall down.” – T.C. Douglas (Page 182)

9. Business Cycle • Recovery – there is a shortage of goods that people want or need and production must go up, thus, more people are hired and they have money to spend etc.

10. THE END 