Todays Warm Up On your warm upexit ticket

Today’s Warm Up �On your warm up/exit ticket sheet: �What do you think is the most traumatic experience a person could go through in their entire life? �Be ready to share.

Examples of Unemployed Workers �Frictional, Structural, or Cyclical?

Type of Unemployment? 1. 2. 3. 4. 5. 6. 7. 8. A recent college graduate who is seeking her first job A former steelworker for a firm that has closed an obsolete plant A worker who has quit his job to move to a new town to be with his family A carpenter who is laid off when housing construction declines because of high interest rates An autoworker who is laid off because auto sales are down A homemaker who decides to seek work outside the home and begins the job search A telephone operator whose job is eliminated when the phone company installs new computer-based switching equipment An oil worker who is laid off because the demand for petroleum declines

Today’s LEQ: How can we determine the overall health of the economy? Tracking Business Cycles

The Business Cycle �The Business Cycle is a period of macroeconomic expansion followed by a period of contraction, or decline �Represents major fluctuations (not day-today ups and downs)

The Business Cycle �Economists follow a country’s GDP to predict business cycles �GDP is the total value of all final g/s produced in an economy and helps to measure our economic well-being

Phases of the Business Cycle � Shows fluctuations: rising and falling of output in relation to potential output � Expansion: Economic growth as marked by rise in GDP � Contraction: Economic decline as marked by falling GDP � Peak: Point at which output starts to decline (start of recession) � Trough: Point at which output starts to increase (end of recession) � The period between the trough and the next peak is called the recovery period or expansion � Recession: two consecutive quarters (six months) of negative growth in real GDP � Depression: deep recession with especially high unemployment and low output

The Business Cycle �We are always at some point in the business cycle Cycles may last less than a year or continue for many years �Free enterprise systems are subject to business cycles because economic decisions are made by ind’ls and businesses acting in their own best self interest �Government plays a role in attempting to prevent wild swings in economic behavior

Impact of the Business Cycle �Where we are in a given business cycle affects our lives every day Available jobs? Prices rising?