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Chapter 3
Economic Activity in a Changing World
Vocabulary
Gross domestic product (GDP) – (answer)
Standard of Living – (answer)
Inflation – (answer)
Deflation – (answer)
Budget Deficit – (answer)
National Debt – (answer)
Budget Surplus – (answer)
Business Cycle – (answer)
Prosperity – (answer)
Recession – (answer)
Depression – (answer)
Recovery – (answer)
Learning Objectives
1. IDENTIFY how economic activity is measured.
2. EXPLAIN how inflation and deflation work.
3. DISCUSS the four phases of the business cycle.
Why Is This Important?
Economic activity affects everyday life. The history of the economy affects
industries and people today and tomorrow.
A
major purpose of an economic system is to (answer).
(answer)
Theses
are used to (answer).
figures are called (answer). They measure:
1. (answer).
2. (answer).
3. (answer).
Goods & Services that satisfy your wants and needs are the (answer)
output of an economy. They’re (answer) of all the activity in the country.
Measuring Economic Activity-Ways to Tell How an Economy is Doing
1.
2.
3.
4.
(answer)
(answer)
(answer)
(answer)
GDP
An important measure of a country’s economic health is its (answer), or
(answer). The total value of the goods and services produced in a country in a
given year is called its gross domestic product.
The United States has a very (answer) GDP.
Calculating GDP (4 main areas)
1. (answer)
2. (answer).
3. (answer).
4. Goods and services (answer).
Unemployment Rate
The unemployment rate measures (answer) Changes in the
unemployment rate show whether an economy is (answer)
Types of Unemployment
1.
(answer)
2.
(answer)
3.
(answer)
4.
(answer)
Rate of Inflation
 Inflation is a general (define)
Inflation CAN happen when an economy is actually too (answer)
The (answer) people are employed, the (answer) people spend.
As demand goes (answer) producers (answer) their prices.
To pay the higher prices, workers demand (answer) wages.
When wages go up, producers (answer) again to pay for the higher wages.
Deflation –is a general (define).
When an economy produces more goods than people want, it has to lower
prices and cut production. As a result, people have less money to buy goods so
the demand continues to go down.
SUPPLY > demand = deflation
National Debt
The main source of government income is (answer). Tax money is used to pay
for (answer) like (answer).
The total amount of money a government owes is its (answer).
Government Revenue > Expenditures = surplus
Government Expenditure > Income = budget deficit.
The Business Cycle
Economies go through ups and downs as a result of (answer), foreign
competition, and (answer).
Slumps in the economic activity were always followed by a new wave of
productivity. This rise and fall of economic activity over time is called the
(answer).
Four Phases of the Business Cycle
1. (answer)
2. (answer)
3. (answer)
4. (answer)
Business Cycle Model Characteristics:
Prosperity
● (answer)
● (answer)
● (answer)
Recovery
● (answer)
● (answer)
● (answer)
Recession
● (answer)
● (answer)
● (answer)
Depression
● (answer)
● (answer)
 Every phase of the business cycle indicates (answer), to industries and
(answer).
 The economic ups and downs of one country (answer) too.
 Depressions are rare (one example of a depression in the United States
history is (answer)).