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Business Cycle & Circular Flow Model - PowerPoint PPT Presentation


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Business Cycle & Circular Flow Model. RECOVERY. PRODUCTION INCREASES PEOPLE GO BACK TO WORK SPENDING INCREASES DEMAND STIMULATES PRODUCTION BUSINESSES MAY START TO INNOVATE A NEW PRODUCTS PROFITS INCREASE, BUSINESS GROWS, ECONOMIC ACTIVITY SOARS. PROSPERITY. LOW UNEMPLOYMENT

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Presentation Transcript
slide2

RECOVERY

  • PRODUCTION INCREASES
  • PEOPLE GO BACK TO WORK
  • SPENDING INCREASES
  • DEMAND STIMULATES PRODUCTION
  • BUSINESSES MAY START TO INNOVATE A NEW PRODUCTS
  • PROFITS INCREASE, BUSINESS GROWS, ECONOMIC ACTIVITY SOARS
slide3

PROSPERITY

  • LOW UNEMPLOYMENT
  • PRODUCTION IS HIGH
  • NEW BUSINESSES OPEN
  • HIGHER WAGES
  • HIGH DEMAND FOR GOODS AND SERVICES
slide4

RECESSION

  • SPENDING DECREASES
  • DEMAND FOR PRODUCTS DECREASE
  • BUSINESSES PRODUCE LESS
  • UNEMPLOYMENT INCREASES
  • GDP DECLINES
  • PRICES INCREASE
    • (INFLATION SETS IN)
slide5

DEPRESSION

  • HIGH UNEMPLOYMENT
  • LOW PRODUCTIVITY
  • A DEEP DEPRESSION AFFECTS THE ENTIRE ECONOMY AND LAST FOR SEVERAL YEARS
ripple effect

Ripple Effect

http://www.youtube.com/watch?v=QQ37RLXNAgc

ripple effect1
Ripple Effect
  • Throw a stone into a serene lake and you’ll create a ripple effect in the water
we have determined the health of our economy to be
We have determined the health of our economy to be…
  • Healthy
  • A little sick
  • So-so
  • Mostly unhealthy
  • Extremely unhealthy
slide9

Does the economy seem better or worse than last year?

  • How has the downturn affect you? Your family?
  • What have you noticed in the community that shows the health of the economy?
  • What have you noticed in the community that may prove or show it may be getting healthier?
ripple effect2
Ripple Effect
  • Throw a major change at a large employer and you’ll create a ripple effect in the economy
what would be the ripple effect if
What would be the ripple effect if…

A large auto factory that employed more than 1,000 people closed in Belvidere, IL. Population 28,350.

  • What effect would it have on the community?
slide12

BUSINESSES

GOVERNMENT

INDIVIDUALS

CIRCULAR FLOW MODEL