Download Recession - Effingham County Schools

The Shape of a Recession
Big Questions
• How are we doing? (Yes, again)
• Why do recessions happen?
• How does the government affect the
economy (and you and me)?
Chapter 14: Economic Instability
• Section 1: The Business Cycle
RGDP
The Business Cycle
Time
• Phases:
• Recession, Expansion, Peak, Trough
The Business Cycle
Output Gap Link
The Business Cycle
• Business cycle = systematic ups and downs of
real GDP
• 2 phases of biz. cycle:
• Recession begins at peak and ends at trough—
peak/trough at least 6 mo’s apart
• Expansion is the recovery from a recession
• Severe recessions can become depressions.
Real GDP ‘75-’10
Directions: Color vertical stripes representing recession years.
Color Key- Recession ______ Expansion white
At the top of the graph, label the Peaks (P) and the Troughs (T).
P
List of recessions
16 Recessions Since 1919
That’s an average of one every 6
years.
(They’ve become less frequent since
1919.)
Causes
• Businesses
– By predicting recessions they can
cause and/or prolong recessions!
• Consumers
– cause “bubbles” (housing, etc.)
– save money when they get scared.
This makes recessions last longer!
II. Causes
• The tulip-bulb bubble.
II. Causes
• The dot-com bubble.
II. Causes
• Federal Reserve
U.S. Real Gross Domestic Product
Great
Recession
dot
coms,
“tight”
monetary
policy
Fed Raises
Oil, debt, and
Interest Rates
bank reg’s
to Fight
Inflation
Iranian
Revolution
Oil Prices
Quadruple/
Vietnam War
Double Dip
Great
Depression
World War II
9/11
Business Cycle Art
• Draw a business cycle and label it
appropriately (peaks, troughs, expansions,
recessions).
• Along the business cycle, draw
pictures/people/symbols showing:
–
–
–
–
what’s happening in the economy.
how people are feeling at each stage.
what the government may be doing.
what businesses may be doing.
Real GDP ‘75-’10
% Change, Consumer Price Index
Green bars
indicate
beginning of
recessions.
Green bars
indicate
beginning of
recessions.
Green bars
indicate
beginning of
recessions.
Directions: Color vertical stripes representing recession years.
Color Key- Recession ______ Expansion white
At the top of the graph, label the Peaks (P) and the Troughs (T).
P
The business cycle,
unemployment, and inflation.
An Activity
Hayek, Keynes Rap Battle