EOCT Review!

1. EOCT Review!

2. Name that term: Fluctuations in economic activity, such as employment and production

3. The Business Cycle Fluctuations in economic activity, such as employment and production

4. The Business Cycle • Fluctuations in economic activity, such as employment and production What do we mean by economic activity?

5. The Business Cycle Three Goals for Economy: • Full Employment

6. Full Employment • Exists when most individuals who are willing and able to work at the prevailing wages in the economy are employed. • We measure this using the unemployment rate.

7. The Business Cycle Three Goals for Economy: • Full Employment • Price Stability

8. Price Stability • Exists when the average level of prices in the economy is neither increasing nor decreasing. • We measure this using a price index. The most popular is the Consumer Price Index

9. The Business Cycle Three Goals for Economy: • Full Employment • Price Stability • Economic Growth

10. Economic Growth • Exists when the economy produces increasing amounts of goods and services over the long term • Measured using Gross Domestic Product (GDP)

11. Business Cycle • The business cycle takes these three characteristics and uses them to illustrate the ups and down in an economy. • There are four parts to the business cycle.

12. Business Cycle There are four parts to the business cycle. 1. Expansionary Phase

13. Expansionary Phase On the uphill of our cycle: • Output = increasing • Unemployment = decreasing • Inflation may occur

14. Business Cycle There are four parts to the business cycle. • Expansionary Phase • Peak

15. Peak Top of the cycle Real output (GDP) is at its highest point

16. Business Cycle There are four parts to the business cycle. • Expansionary Phase • Peak • Contractionary Phase

17. Contractionary Phase Downhill part of our cycle • Real Output = decreasing • Unemployment = rising • Inflation decreases • Leads to Recession

18. Business Cycle There are four parts to the business cycle. • Expansionary Phase • Peak • Contractionary Phase • Trough

19. Trough Bottom of our cycle • Lowest point of real GDP • Can be called a depression

20. Economic Growth We see the business cycle moving up at an angle over time because of economic growth.

21. Practice/Homework Complete the half sheet about the business cycle and unemployment. If you finish before class, turn it in at the chair at the front of the room.

22. Review Define an expansion and long term economic growth, and explain the different between the two concepts.

23. Review Define an expansion and economic growth, and explain the different between the two concepts. Expansion: period of recovery after an economic downturn Economic growth: an increase in the productive capacity of the economy