Download 1.02 Economic Indicators & Business Cycle

1.02 – Analyze economic
indicators and how they affect the
business cycle
Economic Indicators
• Economic Indicators simply measure
economic activity.
• They are:
– GDP (Gross Domestic Product)
– Unemployment Rate
– Rate of Inflation
– National Debt
Gross Domestic Product
• The total value of the final goods and
services produced in a country in a given
year.
• Why is the word “final” important???
Unemployment Rate
• The number of people who are able to
work but don’t have a job during a given
period of time.
• Changes in the rate show whether an
economy is picking up or slowing down.
Rate of Inflation
• Inflation is the general increase in the cost
of goods and services.
National Debt
• The total amount the government owes.
• Main source of income for government…
Taxes
• If it spends more than it makes in taxes,
the government will:
– Borrow money from the public
– Borrow money from other countries
• Let’s look at our handout about the current
National Debt.
The Business Cycle
• The Business Cycle is best described as
the movement of an economy from one
condition to another.
• It has 4 phases:
– Prosperity
– Recession
– Depression
– Recovery
Prosperity
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Prosperity is a peak of economic activity.
Unemployment - low
Production of goods and services – high
New businesses open
Recession
•
•
•
•
Economic activity slows down.
Spending – decreases
Demand for products – decreases
Unemployment – increases
Depression
•
•
•
•
•
•
The lowest point in the Business Cycle
Extended period of high unemployment
Low productivity
Decline in sales of goods and services
Business failures
Can spread to other countries
Recovery
• A rise in business activity after a recession
or depression
• Production starts to increase
• Unemployment decreases
• Increase demand for goods and services
• Can take a while
Let’s Take a Further Look…
• Activity 1: Using the internet, find the
dollar amount of the current national debt.
What was it ten years ago. Has it gone up
or down?
• Activity 2: Using the internet, find the GDP
and the GDP per capita for the United
States, China, India, and Russia. Analyze
the comparisons.