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Economic Activity in a Changing World Ms. Smith Historical Economic Systems… Over time, 4 types of economies in the United States have been identified: Agricultural: Over 200 years ago, during the Colonial Era. People lived off the land and were primarily farmers. Service: Rooted in the Colonial Era as well. Early colonists together to barter for necessary services. Industrial: Rooted in the mid-1800’s, during the Industrial Revolution. When society relied more on machinery to produce goods. Information: Mid-1900s. Internet became an integral part of doing business. Partner Activity!!! With a partner, brainstorm the next economic era. Once you and your partner come up with the new era and a name for your new era, you will create a poster illustrating: Name of your new era Pictures exhibiting characteristics of your new era 4-5 sentence explanation on the back of your poster describing your new era and rationale for why you believe this will be the next economic era Be sure to color your poster in order to receive credit Measuring Economic Activity The wealth of nations rises and falls through periods of war, recession, and prosperity, however, “those who cannot remember the past are condemned to repeat it”. Economic Indicators: measure things like how much a country is producing, whether its economy is growing, and how it compares to other countries. Gross Domestic Product Unemployment Rate Rate of Inflation National Debt Gross Domestic Product (GDP) GDP: the total value of the goods and services produced in a country in a given year. Includes 4 main areas: Consumer Business Government Goods and services sold to other countries *Doesn’t include goods & services not reported to the government Standard of Living: the amount of goods and services the average citizen can buy. Unemployment Rate Measures the number of people who are able to work but don’t have a job during a given period of time. There are 2 types of unemployment: Temporary: Quit job Just graduated from school Seasonal: Landscaper Rate of Inflation Inflation: a general increase in the cost of goods and services. Ex.) High productivity Hyperinflation Deflation: general decrease in the cost of goods and services. Ex.) High productivity, low demand. National Debt Countries can run up large debts. Budget Deficit: when the government spends more on programs than it collects in taxes. Budget Surplus: when a government’s revenue exceeds its expenditures during a one-year period. National Debt: the total amount of money a government owes. Group Activity!!! Get into “families” of 4. Once in your families, you must develop a shopping list for your family to sustain the week, containing at least 5 items. Look up prices for those items for the following years: 1. 2. 3. • • • • 2010 1980 1950 1920 Make a bar graph comparing the 4 time periods. On the back of your poster, explain what you see in relation to inflation, deflation, hyperinflation, etc. 4. 5. • • Your explanation MUST be no shorter than 6 sentences! Due at the end of the class period… The Business Cycle The rise and fall of economic activity over time; where slumps in the economy are always followed by a wave of productivity. There are 4 stages… Prosperity The peak of economic activity. Unemployment is low, production of goods and services is high, and new businesses open. Wages are usually higher so there is greater demand for goods to be produced. More houses are being built because more people can buy houses. Ex.) 1990’s the U.S. because of low inflation and the Internet. Recession The economic slow down. Spending decreases and so does demand for products. Businesses produce less so they need fewer workers. Unemployment rate then increases so people have less to spend. There is a general drop in the total production of goods and services. GDP declines Ripple effect Depression A deep recession that affects the entire economy and lasts for several years. There is high unemployment and low production of goods and services. Can be limited to one country, but usually spreads to other countries as well. The state of the economy is affected by large numbers of people out of work and a lot of shortages. Ex.) Stock market crash of 1929 a.k.a. “Black Tuesday” Recovery Rise in business activity after a recession or depression. Production starts to increase. People start going back to work and have money to spend again. The new demand for goods and services stimulates more production and the GDP grows. Recovery leads to prosperity as new businesses open. The Business Cycle Prosperity Recovery Recession Depression Group Activity Time!!! 1. 2. 3. 4. 5. Get into a group of 2-3 students. Once in your groups, you are to choose an event, business, sports team, etc. that has seen the 4 stages of the business cycle. Then, brainstorm 10 points- relating to the event- for each of the 4 stages in the cycle. Create a poster depicting this information along the business cycle. Include pictures at each of the stages, demonstrating the connection to the business cycle.