production increases people go back to work spending increases demand stimulates production ...
TRANSCRIPT
BUSINESS CYCLE & CIRCULAR FLOW
MODEL
PRODUCTION INCREASES PEOPLE GO BACK TO WORK SPENDING INCREASES DEMAND STIMULATES PRODUCTION BUSINESSES MAY START TO INNOVATE A
NEW PRODUCTS PROFITS INCREASE, BUSINESS GROWS,
ECONOMIC ACTIVITY SOARS
LOW UNEMPLOYMENT PRODUCTION IS HIGH NEW BUSINESSES OPEN HIGHER WAGES HIGH DEMAND FOR GOODS
AND SERVICES
SPENDING DECREASES DEMAND FOR PRODUCTS DECREASE BUSINESSES PRODUCE LESS UNEMPLOYMENT INCREASES GDP DECLINES PRICES INCREASE
(INFLATION SETS IN)
HIGH UNEMPLOYMENT LOW PRODUCTIVITY A DEEP DEPRESSION
AFFECTS THE ENTIRE ECONOMY AND LAST FOR SEVERAL YEARS
Ripple Effect
Throw a stone into a serene lake and you’ll create a ripple effect in the water
We have determined the health of our economy to be…
A. HealthyB. A little sickC. So-soD. Mostly unhealthyE. Extremely unhealthy
Does the economy seem better or worse than last year?
How has the downturn affect you? Your family?
What have you noticed in the community that shows the health of the economy?
What have you noticed in the community that may prove or show it may be getting healthier?
Ripple Effect
Throw a major change at a large employer and you’ll create a ripple effect in the economy
What would be the ripple effect if…
A large auto factory that employed more than 1,000 people closed in Belvidere, IL. Population 28,350.
What effect would it have on the
community?
BUSINESSES
GOVERNMENTINDIVIDUALS
CIRCULAR FLOW MODEL