economics unit three -...
TRANSCRIPT
Friday, September 8th
• Happy Friday! Calm before the storm…
• Sitting in new groups today:
• First students select which section to sit in
• Then everyone else finds them & sits in that section
• Our Opener today will be a Unit 3 Pretest
• Low/no stress – do your best, does not count toward your grade!
Group 1AlbertoZaionnaGrantElizabethJabariOmar
Group 2EdgarJoseKahlialEmmanualOmarAngelFavioKodou
Group 3GraceKrisBrookeDestinyDwightDaveonTamiaJerome
Group 4Ke’ShaunMa’tekaAlondraPedroBriannaJenniferTarndeep
Unit 3 PretestPlease clear your desk – all you need is a pencil
We’ll be taking the Pretest with:1.Zipgrade bubble sheet then…2.Hand held clickers
When you’re done just raise your hand and I’ll collect your materials
Remember ‘Test Mode’:• No electronics• No talking• No squawking• No walking• No gawking!
Class Updates
• Unit 2 Test scores are in Synergy!• Congratulations to everyone who did GREAT!
Students Needing to Make-up Their Unit 2 Test
AlbertoGracePedroElizabethOmarAngelDestiny
Students Who Qualify for Test Corrections/Test Retakes
Zaionna JabariEdgar FavioJose JeromeDaveonGrant Come to Ma’teka Tutoring NextKodou Tue & Th!!Brianna
Class Updates
Econ Budget Project
• Grades are all updated• Remember:
• Your next due date if Friday, September 15th –Phase 4 & 5
• We will have one computer lab day next week, but you should get started ASAP!
• Read the Cover Note and come to tutoring if you need help!
• Final due date is Monday, October 2nd (our first Monday after Fall Break)
Class Updates
EverFi
• All grades have been input in Synergy• Remember – you can go back and retake tests until you get
100%!• Next module due Monday!
Unit of Study Completed By Possible Points Points Earned
1. Savings 8/7/17 50
1. Banking 8/28/17 50
1. Payment Types 9/5/17 50
1. Credit Scores 9/11/17 50
1. Financing Higher Education 9/25/17 50
1. Renting vs. Owning 8/21/17 50
1. Insurance & Taxes 8/14/17 50
1. Consumer Protection 9/18/17 50
1. Investing 10/2/17 50
Progress Reports
Progress Reports• Gives you the details you need to know
exactly what you can do to help your grade.
• Get it signed by your caregiver (and yourself) – bring it back by Wednesday for 25 bonus points!
USA Test PrepIf your name is listed, please take out your phone and create a USA Test Prep account.
Following are the steps:1. Open a web browser2. Go to USA Test Prep.com3. Click the orange login icon on the upper right hand side of webpage4. Click on Create an Account
5. Enter School Code: Pebblebrook6. Enter Initial Password: stu12237. Complete the account setup process and let me know you’re done –
thanks!8. Remember your sign-on & password
Wednesday, September 13th
Welcome back after Hurricane Irma!Hope everyone weathered the storm okay.
As you come in, please:• Get a Vocabulary Exploration off the front table
and begin as soon as you find your seat.• Seating – back to quads
– but different quad-mates!• Ask if you can’t figure it out.
• Also, time to turn in your signed Progress Reports!
• Hold on to the Progress Report – it’s your Action Plan when you come to tutoring!!
Congratulations Cookies!
We need to celebrate our successes, sooo…
Congratulations to the following students for making a B on their Unit 2 Test:
KrisKe’ShaunAlondraEmmanuelTarndeepAngelAlbertoJennifer
Class UpdatesImportant Upcoming Dates:
• EverFi• Module #5 due the past Monday, scores are
in Synergy• Module #6 will be due next Monday!
• This Friday• School Progress Reports go home (homeroom
at the end of the day on Friday)• Econ Budget Project – Phase 4 and Phase 5
due – we’ll talk more about this tomorrow• Friday, September 22nd
• Unit 3 Test
Class UpdatesImportant Upcoming Dates:
• Week of September 25th
• Fall Break!!• Monday, October 2nd (1st day back after Fall Break)
• Econ Budget Project – Final Due Date!• Friday, October 6th
• Departmental Final (5% of your grade)• ALL Econ make-up work due – no exceptions!
• New news on Milestones Test• State DOE says we have to take Milestones test in
December – exact date TBD• We still need to switch to Government on October 9th
• Sooo we’ll be trying to keep Economics fresh in your mind while we continue with Government…stay tuned for more details later!
Unit 3 Revised TimingWhile we all enjoyed our Irma Days off, we still need to take our Unit 3 Macroeconomics summative test by Friday, September 22nd
Following is our Action Plan:
Date Concept
Today Gross Domestic Product
Unit Study Guide – complete each day
Thursday, 9/14 Unemployment
Friday, 9/15 Computer Lab Day
NearPod lesson on inflation
Econ Budget Project – Phase 4 & 5 due
Monday, 9/18 Business Cycle
Tuesday, 919 Monetary Policy/Federal Reserve
Wednesday, 9/20 Fiscal Policy/Congress
Thursday, 9/21 Review Day
Friday, 9/22 Computer Lab Day
Unit 3 Test Day
Unit 3 - MacroeconomicsTrying some new instructional strategies!
Good News• Less PowerPoints and me talking!• More YOU doing things, exploring concepts, teaching each
other and yourselves
Not-So-Good News• Attendance is even MORE important! Your only way to get the
information you need is by being here! There’s no other way to deliver the information with these new strategies.
Keys to Success• Be in class every day!• Using our time effectively – don’t waste a minute!• Stay on task, follow instructions so that you can make the
connections and learn what you need to learn to succeed!• Stay organized – keep putting all your papers in your 3-ring
notebook – that way you have everything you need to study
Today’s Learning Standard
SSEMA1 Illustrate the means by which economic activity is measured. a. Identify and describe the macroeconomic goals of steady
economic growth, stable prices, and full employment. b. Define Gross Domestic Product (GDP) as the sum of Consumer
Spending, Investment, Government Spending, and Net Exports (output expenditure model).
c. Define unemployment rate, Consumer Price Index (CPI), inflation, real GDP, aggregate supply and aggregate demand and explain how each is used to evaluate the macroeconomic goals from SSEMA1a.
d. Give examples of who benefits and who loses from unanticipated inflation.
e. Identify seasonal, structural, cyclical, and frictional unemployment.
f. Define the stages of the business cycle, including: peak, contraction, trough, recovery/expansion as well as recession and
depression.
Economic Freedom• Consumers and producers make their own economic decisions
• Choose their own occupations, employers, and uses for their money
• Choose what, where, and how to produce
Economic Efficiency• Use scarce resources well and not wasteful
Economic Equity/Equality
• Equal pay for equal work
• People are fair in both their purchases and sales
Economic Security
• Protection from adverse events such as layoffs and illnesses
• Social Security
Full Employment• Provide as many jobs as possible
Price Stability• Prices do not go up or down too much, too often
• Inflation – general rise in prices
• Deflation – general fall in prices (dollar worth less)
Economic Growth• More jobs means more money for people
Macroeconomics
Macroeconomics gives us a overall view of
economic activity
Macroeconomics is the study of the whole
economy together – the aggregated (everything
added up) spending, saving, and investing decisions
of all consumers and businesses
These factors together – households, businesses,
government, and net exports – describe the health
of the economy as a whole!
Key Economic Indicators
The health of the economy and the “big picture” of
economics is measured in several ways
These include:
Gross Domestic Product (GDP)
The Consumer Price Index (CPI)
This is a measure of the rate of inflation
Unemployment
Let’s think about it…
Gross
Not gross as in…
But gross as in…
Domestic
As in homeland
Product
As in everything
added together
adjective
(of income, profit, or interest) without
deduction of tax or other
contributions; total.
"the gross amount of the gift was
$1,000"
•adverb
1.1.
without tax or other contributions
having been deducted.
verb
1.1.
produce or earn (an amount of
money) as gross profit or income.
"the film went on to gross $8 million
in the U.S“
Gross Domestic Product (GDP)
To compare our system with other countries’
systems, and to compare the strength of our
own economy year to year, economists use
something called the
Gross Domestic Product (or GDP),
which is the total dollar value of
all final goods and services
produced within a country during
one calendar year.
Final Goods?? Final goods are what we buy!
Need to be aware that a lot goes into
making final goods:
Intermediate goods
Raw materials (from planet Earth)
Example:
Final Intermediate Raw
Good Good Materials
Lasagna Noodles Wheat, flour, water
Tomato Sauce Tomatoes, water
Meatballs Beef, spices
Final Goods vs. Intermediate &
Raw Materials
Let’s practice!
Work with a neighbor to list the ingredients
and then sort them by whether they’re
intermediate goods or raw materials.
Gross Domestic Product (GDP)
GDP is measured by assessing the total expenditures
(spending) of four different economic sectors:
1. Consumers (C) – Consumer Spending
2. Government (G) – Government Spending
3. Investment (I) – Investments from Industry
4. Net Exports (NX) – Exports Minus Imports
Famous Economic Formula
GDP= C+G +I+(X-M)
C= Personal consumption expenditures
(consumer spending).
Includes
durable goods: a lifetime of more than one
year, and
non-durable goods: a lifetime of less than
one year, and services.
G = Government Purchases
The dollar amount that federal, state, and
local governments spend on items
IE: highways, education, defense, etc.
I = Capital Investment
Total value of all capital goods investment/purchases in a given nation during one year.
Fixed investment: Buildings, machinery, equipment
Inventory investment: raw materials, intermediate goods, final goods
Net Exports The reason we subtract our imports from our exports is
this:
Exports - The money other countries spend on our
exports adds value to our economy
Imports - The money we spend on goods imported
from other countries takes money out of our
economy
So, the net export
expenditure is
calculated only when
the transactions
add value to our
economy!
Exports vs. Imports Goods & services
made in our own
country
Other countries buy
them & add to our
economy
Goods & services
made in other
countries
When we buy other
countries’ goods &
services it does NOT
add to our economy
They use only products produced in the current year. This would exclude things bought at yard sales.
Which of the following was used in the calculation of the GDP in 1999?
A. A car manufactured in 1998 but sold in 1999.
B. A used 1993 Toyota that was sold to Ms. Simpson in Memphis in 1999.
C. A Ford F150 produced in 1999 but sold in 2000.
How Economists Calculate the GDP:
The answer is C again!
How Economists Calculate the GDP:
They use only items produced within
national borders.
Would this include or exclude
Coca-Cola (a U.S. company)
produced at a plant in Russia?
Exclude
GDP: Is a measure of the health or
strength of our economy
Analyzing GDP – What Does it Mean?!?
If the nation’s GDP increases over time, you can tell that the economy is growing!
That’s a good thing!!
To get an accurate measurement, the calculation depends on two more factors:
Real GDP: the GDP of a nation adjusted for inflation
Nominal GDP: the GDP of a nation beforeaccounting for inflation
So, a nation’s rate of growth is the percentage change
in its real GDP over time
GDP does NOT include: value of used products
value of volunteer work
purely financial transactions
value of intermediary goods
Transfer of assets
Value of non-market activities (DIY)
Underground economies (anything not
reported to the government)
Economic Lowdown - GDP
GDP Jigsaw In your quad each of you will become
an ‘expert’ on one component of Gross
Domestic Product (GDP)
1. Get your GDP assignment and your GDP
Graphic Organizer,
2. Read your info card & complete your
graphic organizer with the info provided
3. Then, when instructed, all the quads’
‘experts’ will get together for additional
research and brainstorming!
GDP JigsawMeetings of Like-Minded ‘Experts’!
Within your expertise (C, I, G, NX), meet
with your fellow experts to:
Help fill any info gaps on your ‘Experts’ G.O.
Study your Info Poster for additional info and
add it to your G.O.
Brainstorm specific examples of what’s included
in your GDP component (‘Experts’ need five).
Get ready to ‘teach’ your quad-mates about
your area of expertise!
GDP JigsawMeeting of Quad-Sperts (Quad Experts)!
Now that you’re each Brainiacs on your
area of expertise it’s time to share your
knowledge!
Each ‘Expert’ teaches their quad-mates about
their GDP component & helps them complete
their G.O. (5 min/component)
Then you’ll rotate your G.O. to the quad-mate
to your right to add an additional new example
of that component to your G.O..
Keep rotating G.O.s until everyone’s added a
new example to each component to make your
G.O. 100% perfect and completed!
Thursday, September 14th
Good afternoon!
As you enter, please sit in the same
seats you were in yesterday and pick up
a Vocab Exploration off the front table
and complete it.
Class Updates Last call for signed Progress Reports!
25 bonus points!
Hold on to your Progress Report – this will be
your Action Plan for improving your grade!
TutoringUnfortunately a last minute social
studies department meeting this
afternoon is going to prevent me from
doing tutoring this afternoon.
Definitely will have tutoring next
Tuesday and Thursday
Given the fact we’re so short on time,
would anyone like to have tutoring on
Monday afternoon, too?
Econ Budget ProjectPhase 4 and Phase 5 due tomorrow
Let’s take a look at exactly what you
need to do:
By now you should already have:
Your disposable income
Your housing and transportation costs
subtracted from your disposable income
Some money left for…
Variable costs!
We learned yesterday that variable costs ‘vary
based on how much you use (i.e. opposite of
fixed costs)
Phase 5 – Debt Obligations
You have to take care of your debt obligations!• For some of you this is easy• For others it may be hard
• You may have to go back to your food, housing and transportation costs to cut back so you can live within your disposable income
EBP Budget Before you turn in your EBP
tomorrow you need to
balance your budget (i.e. live
within your disposable income)
1. Add up all your costs (housing,
transportation, variable costs & debt obligations)
If your cost total is equal or less than
your disposable income
…congratulations! You’re in great
shape!
If your total costs are MORE than your
disposable income …
2. You need to go cut costs
somewhere so that your total costs are LESS than your disposable
income!
Budget Activity
Monthly Annual
P Income
H Gross Income
A Fed. Witholding
S State Witholding
E F.I.C.A.
2 Disposable Income
Expenses
P Housing
H Renters Insurance
A Household supplies
S Food
E Electricity
Water
3 Natural Gas
Cable TV
Internet
Auto Payment
Auto Insurance
Auto Maintenance
Gasoline
P Cell Phone
H Household Items
A Personal Care Items
S Clothing
E Entertainment
4 Electricity
P Investment
H Savings
A Miscellaneous
S
5
Total Expenses 0 0
YOUR TOTAL EXPENSES MUST EQUAL YOUR DISPOSABLE INCOME
Tomorrow…
We have a homeroom for Progress
Reports which will cut our 4th block short
We lost two days to Hurricane Irma…
Tomorrow…
We’ll be meeting in the Media Center
Computer Lab tomorrow
Come in calmly, quietly and find a PC
You’ll be completing a NearPod.com
lesson on inflation and Consumer Price
Index (CPI) – this will include:
Online activities
Completing Guided Notes
Only When You’re Done… When you’re done with your NearPod lesson I
will be able to see it on my Teacher screen
Only when I give you a thumbs-up can you
begin working on your Econ Budget Project
If anyone tries to work on their EBP before
completing their NearPod lesson:
You will waive your right to turn in your EBP until our
final due date (10/2) and have to live with a zero
until then.
You will also have 100 points deducted from your
EBP grade.
What did we learn yesterday?GDP is the total dollar value of all final goods and services
produced within a country during one calendar year.
Formula
GDP = C + G + I + NX
Two Kinds
Nominal and Real
Inflation Effect
GDP - Fed Reserve of St. Louis
How Economists Calculate the GDP:
Which of these would be counted in the
GDP?
A. A tree cut by a woodcutter who sells it to a
lumber yard.
B. The lumber bought by the lumber yard who
then sells it to a furniture manufacturer.
C. A table made by the manufacturer now sold
to a couple in Detroit, Michigan.
The answer is C
Checkpoint Questions Services such as
mowing the lawn or a
doctor’s visit, fall under
consumption
expenditures as a:
a. Durable good
b. Fixed investment
c. Non-durable good
d. Inventory
investment
At the end of the year, a
bike manufacturing firm
finds that its inventories
of bikes are $15,000
above the amounts of its
inventories last year.
Where would this be
counted in the GDP?
a. Consumption
b. Investment
c. Net exports
d. Government
purchases
Focus #1 – Measuring Economic Activity The student will illustrate the means by which economic
activity is measured
Explain that overall levels of income, employment, and prices are determined by the spending and production decisions of households, businesses, government, and net exports
Define Gross Domestic Product (GDP), economic growth, unemployment, Consumer Price Index (CPI), inflation, stagflation, and aggregate supply and aggregate demand.
Explain how economic growth, inflation, and unemployment are calculated.
Identify structural, cyclical, and frictional unemployment
Define the stages of the business cycle, as well as recession and depression.
Our Economic Health Measures
Gross Domestic Product Measures a country’s output or productivity
Unemployment Measures how much of our productive resources
(i.e. people!) are being used productively
Tomorrow we’ll look at inflation and the
Consumer Price Index. http://www.investopedia.com/terms/u/unemployment.asp
Unemployment
To again monitor the health of our economy,
economists measure the Unemployment Rate.
Each month, they survey certain Americans to
find out their employment status.
The U.S. Government defines “employed” as
people 16 and older meeting one or more of
the following criteria.
Criteria to be considered “Employed”
1. Working for pay or profit for 1 or more hours
this week.
2. Working without pay in a family business 15
or more hours.
3. Having a job, but being ABSENT due to
illness, weather, vacation, etc.
The U.S. Government defines
“Unemployed" as:
1. NOT meeting any of the criteria above
AND
2. ACTIVELY looking for work during the past 4 weeks.
The most closely watched and highly publicized labor force
statistic is
the UNEMPLOYMENT RATE=the percentage of people in
the civilian labor force who are UNEMPLOYED.
Why is there Unemployment? In the end, unemployment depends on supply and
demand – the supply of able workers and the
demand by businesses for those employees
Some, but not all, unemployment is the result of a
downturn in the economy – a change in supply or
demand
Economists classify four different types of
unemployment
STRUCTURAL Unemployment
Unemployment that occurs as a result of
changes in technology, consumer
preferences, or in the way the economy
is “STRUCTURED.”
EX: Many TV repairmen had to find new
work as televisions are now built with
transistors instead of tubes.
CYCLICAL Unemployment
This unemployment results from contractions in the economy.
This type of unemployment HARMS the economy more than any other types of unemployment. During the Great Depression, the
unemployment rate reached an all time high of about 25%.
As recently as 2009 and 2010, the unemployment rate reached 10.2%.
FRICTIONAL Unemployment
People who have decided to leave one
job and LOOK for another typically
better job.
Also, new entrants and re-entrants into
the LABOR FORCE.
Economists consider frictional
unemployment as a NORMAL part of a
healthy and changing ECONOMY.
SEASONAL Unemployment
This predictable unemployment
fluctuates as a result of HOLIDAYS, school
breaks, and industry PRODUCTION
schedules.
Checkpoint Questions Joe has recently lost his job
because the factory where he
works has moved its
operations to China. Joe still
wants to work but he realizes
that if he wants to get another
job, he will have to learn how
to work with new technology.
This is an example of…
a. Cyclical unemployment
b. Structural unemployment
c. Frictional unemployment
d. Seasonal unemployment
Toyota shuts down all of its
American factories as it
continues to cut costs to
cover third quarter losses.
What type of
unemployment is
occurring?
Cyclical unemployment
Structural
unemployment
Frictional
unemployment
Seasonal
unemployment
Unemployment Stand & Sort Each of you will be given a descriptor
strip:
Read it and decide which type of
unemployment it describes
Then go tape it under the correct
unemployment type on our anchor chart.
We’ll review and discuss in a moment.
I Spy Unemployment!NOW we’re going to work with our
Quad-Mates to identify different types
of unemployment that can be found at
several local employers.
Each Quad will receive a different
company
Brainstorm together and write down at
least one example of each type of
unemployment.
Your examples should include a complete
description of the job/employee involved and
why it demonstrates that type of unemployment
Friday, September 15th
In Media Center Computer Lab
Inflation and CPI lesson delivery via
NearPod.com
Consumer Price Index The Consumer Price Index (CPI) is a measure of the
change in prices in an economy
Economists add up the total price of a “market
basket” of typical items bought by the average
family in a month
Then, they compare the total price of these goods
to the total price of the same items during a base
period (or previous year) by dividing the total by
the base
Then, they multiply the result by 100 to have an
index figure for comparison purposes
CPI = cost of today’s market basket
cost of a market basket in previous timeX 100
Let’s Look at an Example…
Let’s say that in 2006, a year that we would
like to serve as our base year, the market
basket cost $960
Then, we measure the same goods again in
2007 and find that they cost $1000
So, it works out like this:
CPI = 1000
960
CPI = 1.04 X 100
CPI = 104
X 100Remember, this number is an index figure. By itself, it doesn’t tell us much. We compare it to 100 (the base number integer that is always used) to figure out the percentage change!
Calculating Percentage Change
So, when we compare to our base integer of
100, we see that there has been a 4%
increase in prices:
We end up with 4/100, or 4%
If in this same year, GDP rose by only 4%, then we
know that there was no real growth – the change
was only due to inflation
However, if it grew by more than 4%, then the
economy did actually grow!
104 – 100
100
CPI Index
from
calculation
Base CPI integer that
is always used
Inflation and Growth
On the other hand, if prices increase but the
economy does not grow, a condition called
stagflation occurs. Stagflation is when there is
high inflation, the economic growth rate
slows and unemployment remains high.
Inflation and Growth
High inflation hurts wage earners because the
money they make is now worth less
Some businesses may offer cost-of-living
adjustments for their employees to balance
out the effects of inflation
Monday, September 18th
Good afternoon!
As you enter, please pick up today’s
Vocabulary Exploration and complete it
Remember to answer any questions at the
end!
I’ll be handing back your Econ Budget
Projects. All grades have been updated in
Synergy.
Next due date is your final one on October 2nd.
Class UpdatesReminders:
Unit 3 Study Guides – you’re supposed to
be completing each day as we go through
unit!
Unit 3 Test is this Friday!
All Unit 3 Papers due on Friday
Extra tutoring time available this week –
3:40 – 4:30
Today
Tomorrow
Thursday
Today’s Learning Standard
SSEMA1 The student will illustrate the means by which
economic activity is measuredExplain that overall levels of income, employment, and prices are
determined by the spending and production decisions of
households, businesses, government, and net exports
• Define Gross Domestic Product (GDP), economic growth, unemployment, Consumer Price Index (CPI), inflation, stagflation,
and aggregate supply and aggregate demand.
• Explain how economic growth, inflation, and unemployment are
calculated.
• Identify structural, cyclical, and frictional unemployment
• Define the stages of the business cycle, as well as recession and
depression.• Describe the difference between the national debt and
government deficits
What Have We Learned So Far?
• GDP
• Definition The total dollar value of all final goods and services produced within a country during one calendar year.
• Formula
• C + G + I + NX = GDP
• What does it measure?• Output, productivity, growth
• We measure spending, because if people are
buying then someone’s making it, too!
What Have We Learned So Far?
• Inflation• What is it?
• Measured by CPI – Consumer Price Index
• What is the ‘Market Basket’?
• Purchasing Power – how far does our money go?• When prices/inflation goes up – what happens to our
purchasing power? Purchasing Power goes down
• When prices go down – what happens to our purchasing
power? Purchasing Power goes up
• Winners and Losers• Winners – ex. Borrowers
• Losers – Lenders/Banks
• Inflation in 2 Minutes
What Have We Learned So Far?
• Unemployment
• What’s ‘employed’?
• What defines ‘unemployment’?
• 4 types
• Frictional • normal, got the training, in between jobs
• Structural• Job is outsourced, replaced by tech, need
new training
• Cyclical • worst kind, downturn in overall economy
forces layoffs
• Seasonal• Part-time, holidays only, peak sales periods
Now That We Understand Our Measurements…
Measures Measurement Tool
Growth, Output, Productivity GDP
Unemployment Unemployment Rate
Inflation/Costs CPI
Now we need to see what the ‘measurements’ tell us!
By Understanding the Measurements We
Understand the Health of Our Economy
Economies ‘flow’ in a continuous rhythm of
good times and not-so-good times
What’s a Cycle?
Does a roller coaster car every go away from the tracks?
I hope not!
Does the roller coaster car keep going around & around?
Well, yeah!
So that’s how a roller coaster is like a cycle…it keeps going around and around!
A Business Cycle Keeps Going…
Round and round, but
with some ups and
downs!
Today we’re going to
look at those ups and
downs.
Business Cycles Fluctuations in Real GDP are referred to
as Business Cycles.
The duration and intensity of each
phase of the Business Cycle are not
always clear.
Business Cycles are typical of Market,
Capitalistic economies due to the free
nature of those economic systems https://www.youtube.com/watch?v=6XpXsC-yNHI
https://www.youtube.com/watch?v=T5seDnLO6M4
Expansions are periods of increasing
Real GDP.
Unemployment decreases, businesses
expand, and Personal Consumption
increases.
As expansions continue, there tend to
be upward pressures on prices
(inflation) and interest rates.
Expansions
A Word About Interest Rates The amount of money charged as a fee
for lending money.
The price of borrowing money.
As interest rates rise LESS consumers will
borrow money IF they are WILLING and
ABLE
As interest rates fall MORE consumers
will borrow money IF they are WILLING
and ABLE
Peak
A peak is a period when the economy
starts to level off.
Businesses postpone new investments,
and consumer saving tends to increase.
Rising prices and interest rates tend to
restrict purchases and investments,
often leading to a Contraction.
Contraction
A Contraction is a period of declining Real
GDP.
Consumer spending decreases, and
unemployment increases as businesses layoff
workers and shorten work hours.
Interest rates and prices level off, and often
decline during long contractions.
Recession:
Six months of declining Real GDP
Depression:
Twelve months of declining Real GDP
coupled with at least 15%
unemployment.
Long Term Contractions
TroughA Trough is the bottom of a
Contraction. Lowest interest rates and
prices bring customers back to markets.
Business Cycle Jigsaw In your quad each of you will become
an ‘expert’ on one component of the
Business Cycle.
In Your Quad1. Get your Business Cycle assignment and your
Business Cycle Graphic Organizer,
2. Read your info card & complete your graphic
organizer with the info provided
3. Then, when instructed, all the quads’ ‘experts’ will
get together for additional research and
brainstorming!
10 min.
Business Cycle JigsawMeetings of Like-Minded ‘Experts’!
Within your expertise (Peak, Contraction,
Trough & Expansion), meet with your fellow
experts to:
Expert Meetings
Each of you – read your bigger Info Sheets
Brainstorm specific examples of word clues and
potential ways to describe your B.C. Stage
Help fill any info gaps on your ‘Experts’ G.O.
Get ready to ‘teach’ your quad-mates about
your area of expertise!
15 min.
Business Cycle JigsawMeeting of Quad-Sperts (Quad Experts)!
Now that you’re each Brainiacs on your
area of expertise it’s time to share your
knowledge!
Back to Your Quads
Each ‘Expert’ teaches their quad-mates about
their portion of the Business Cycle & helps them
complete their G.O.
5 min/component = 20 total min
Wrap it Up! Let’s create a wall-size business cycle!
Let’s label our Business Cycle
Add Word Clues for each part
Add Potential Ways to Describe It!
Tuesday, September 19th
As you come in please:
Your Vocabulary Exploration off the Front Table
and complete it
Remember to answer the questions at the
bottom
Class Updates
• Tutoring – Today and Thursday
• Reminders:
• This Friday
• Unit 3 Test
• All Unit 3 papers are due
• Monday, October 2nd
• Final Due Date for Econ Budget Project
• Friday, October 6th
• Final Due Date for ALL Make-up Work
Class Updates
• Econ Budget Project• Phase 4
• Phone, clothing & entertainment
• Phase 5
• Debt Obligations
• Final Turn-In
• Clean, neat versions
• Explanations – for each budget item
• Presentation Folders - $0.75 if you’d like to buy
one!
What Have We Learned So Far?
• GDP
• Definition
• Formula
• CPI
• Inflation
• Unemployment
• 4 Types
• Business Cycle• 4 parts
Today’s Learning Standard
SSEMA2 Explain the role and functions of the Federal Reserve System.
a. Explain the roles/functions of money as a medium of exchange, store
of value, and unit of account/standard of value.
b. Describe the organization of the Federal Reserve System (12 Districts,
Federal Open Market Committee (FOMC), and Board of Governors).
c. Define monetary policy.
d. Define the tools of monetary policy including reserve requirement,
discount rate, open market operations, and interest on reserves.
e. Describe how the Federal Reserve uses the tools of monetary policy
to promote its dual mandate of price stability and full employment,
and how those affect economic growth.
Functions of Money
Money is any good that is widely accepted in exchange of goods and
services, as well as payment of debts.
Three functions of money are:
1. Medium of exchange: Money can be used for buying and
selling goods and services. If there were no money, goods would have
to be exchanged through the process of barter (goods would be
traded for other goods in transactions arranged on the basis of mutual
need). Such arrangements are often difficult.
2. Unit of value: Money is the common standard for measuring
relative worth of goods and service.
3. Store of value: Money is the most liquid asset (Liquidity measures
how easily assets can be spent to buy goods and services). Money’s
value can be retained over time. It is a convenient way to store
wealth.
Money, Money, Money!As you have learned, the economy
operates around money Before 1913, hundreds of national banks
could print as much paper money as they wanted, as often as they wanted!
They could also loan out money when times were good, or refuse to loan money when times were bad
These practices made huge profits for bankers, but greatly hurt the economy as a whole!
So, the government created a solution…
The Federal Reserve System A special bank, referred to as The Federal
Reserve (“the Fed”), was established in 1913
to help control the money supply (or, the
amount of money) in the economy
These tasks are called monetary policy – or, the
regulation of the amount of money available in
the economy
The Fed does this in order to promote economic
growth and full employment to limit the impact of
inflation and recessions
These are called the “goals” of monetary
policy!
Other Fed Responsibilities Another huge task that the Fed is responsible
for is controlling what the banks can and
cannot do
They do this to make sure that banks are all playing
by the same rules!
The most important job is to tell the banks how
much of their money must be held in the form of
reserves
Reserves are money that the bank must keep in
its vault instead of loaning out for a profit!
Why do you think it’s important for banks to hold
some money as reserves?
Structure of the Fed
The Fed is often discussed as the nation’s central bank – but, it is actually a system
The Federal Reserve System is made up of 12different banks in various regions of the nation
Each of these banks is able to print paper money, called Federal Reserve Notes
The system as a whole is run by a Board of Governors, who are appointed by the U.S. President
The Chairman of the Federal Reserve is Janet Yellen
The monetary policy of the Fed is decided and enforced by the Federal Open Market Committee (FOMC)
Tools of the Federal Reserve
The Federal Reserve has several ‘tools’ they
can use to help our economy:
1.Federal Open Market Committee
2.Reserve Requirements
3.Discount Rate
Federal Open Market Committee (FOMC)
Regulates the money supply by buying and
selling securities, or bonds
Securities or bonds are documents issued by the
government for which you pay a set price now, in
exchange for a higher fixed amount (called the
“face value”) later
When securities are bought and sold, this is called
an “open-market operation”
A bond usually “matures” – or can be exchanged
for its face value – in 5, 10, or 20 years
Federal Open Market Committee (FOMC)
When the economy is in a recession, the
Federal Reserve will try to stimulate consumer
demand by increasing the money supply
The money that it pays for these securities then
goes into the banking system, and thus, increases
the money supply to the public
When banks have more money to lend, they lower
their interest rates
Down the line, the point of the Fed’s actions are to
encourage economic growth!
Remember Inflation? Sometimes, though, the problem in the
economy is that it’s growing too fast
This leads to a rapid increase in prices, and could
lead to overproduction
Then, the Fed will sell bonds to the public, and
keep the money they pay for them as
reserves in their vaults
This lowers the money supply available to the
public in order to curb inflation and control
production rates (leads to higher interest rates)
So, the use of securities is a give and take!
Reserve RequirementsAnother tool of the Federal Reserve is
reserve requirements.
Reserve requirements are the amount of
consumer deposits that banks have to hold
in ‘reserve’ for an average amount of daily
withdrawals.
Acts as a protection from ‘runs on the
bank’
Our current reserve requirements are
10%.
Reserve Requirements If the Fed wants to increase the money
supply they can lower the discount rate
Banks have more money to lend out
If the Fed wants to decrease the money
supply they can increase the discount
rate
Banks have less money to lend out
One More Task… The Fed may also regulate the money supply
through the discount rate
The discount rate is the interest rate that the
Federal Reserve charges other banks to lend them
money
When the discount rate is high, banks don’t borrow
as much money and they charge higher interest to
the public (lower money supply)
When the discount rate is low, banks want to
borrow more money to make more profit on loans
(higher money supply)
Monetary PolicyGallery Walk
Calmly, quietly borrow a clipboard and
walk around the hallway to find all the
answers for your graphic organizer.
MoneyCredit Cards
Credit cards represent a loan. The card (or the
number) is simply a way to access a line of credit.
On the other hand, a debit card is a way to spend
checkable deposits, just like a paper check.
Buying Bonds
Increases money supply
Lowers Interest
Rates
Selling Bonds
Decreases money supply
Interest RatesGo Up
Wednesday, September 19th
Good afternoon!
As you come in, please get a
Vocabulary Exploration off the front
table and complete it!
Class Updates
• Tutoring – Thursday
• Reminders:
• This Friday
• Unit 3 Test
• All Unit 3 papers are due
• Monday, October 2nd
• Final Due Date for Econ Budget Project
• Friday, October 6th
• Final Due Date for ALL Make-up Work
Class Updates
• Econ Budget Project• Phase 4
• Phone, clothing & entertainment
• Phase 5
• Debt Obligations
• Final Turn-In
• Clean, neat versions
• Explanations – for each budget item
• Presentation Folders - $0.75 if you’d like to buy
one!
A Quick Formative Let’s do a quick formative to see how
we’re tracking on what we’ve covered
so far
Just 10 questions
With bubble sheet & our handhelds
Unit Three Formative
Please clear your desk and shift into ‘Test Mode’• Remember:
• No electronics• No talking• No squawking (no disruptions)
• No walking (raise your hand & we’ll
come to you)
• No gawking (eyes on your own
paper)
Let’s Review!Monetary Policy
What is it?
Controlling the amount of money supply in an
economy to promote price stability &
employment
Who does it?
Federal Reserve Bank System
Word Clues
Monetary Policy = Money Supply in Economy
Federal Reserve
Tools They Use:
Let’s Review – Monetary Policy! Word Clues
Monetary Policy = Money Supply in Economy
Federal Reserve
Tools They Use: Federal Reserve
Monetary Policy
Tools
Ways They Can:
Increase Money Supply
Ways They Can:
Decrease Money Supply
FOMC – Open Market
Buying/Selling Govt Bonds
Buy Bonds(more money in the
economy)
Sell Bonds(less money in the
economy)
Reserve Requirement – How
much $$ banks have to
‘reserve’ for withdrawals
Lower Reserve
Requirement(banks can loan out
more money)
Increase Reserve
Requirement (banks has less money
for loans)
Discount Rate – interest rate
the Fed charges member
banks for loans
Lower Discount Rate(Cheaper to borrow
money)
Raise Discount Rate(more expensive to
borrow money)
Possible Scenario #1
Suzy Q deposits $1,000 into her bank savings account
Question
How much of Suzy Q’s money can the bank now
lend to others in exchange for earning interest.
Answer
10% - required reserve - $100
90% - available for new loans - $900
Possible Scenario #2
Overall economy in extended expansion phase and
close to ‘over-heating’.
Question
What can the Fed do to ‘cool down’ the economy
and avoid the Peak phase and moving into a
contraction?
Answer
Reduce the money supply by:• Selling bonds – consumers turn in their money in exchange
for a government bond or
• Raise the discount rate – increases the cost of borrowing• Raise the reserve requirement – banks have less money to
loan out
Possible Scenario #3
Overall economy in extended contraction phase
and needs to be ‘warmed-up’.
Question
What can the Fed do to ‘warm up’ or stimulate the
economy and help increase demand/spending?
Answer
Increase the money supply by:• Buy bonds – consumers turn in their government bonds in
exchange for money or
• Lower the discount rate – decreases the cost of borrowing
• Lower the reserve requirement – banks have more money to loan out
Today’s Learning Standard
SSEMA3 Explain how the government uses fiscal policy to
promote price stability, full employment, and economic
growth. a. Define fiscal policy.
b. Explain the effect on the economy of the government’s taxing and spending decisions in promoting price stability,
full employment, and economic growth.
c. Explain how government budget deficits or surpluses
impact national debt.
What is Fiscal Policy?
Fiscal policy is the government’s attempt to
influence or stabilize the economy through
taxing and government spending
Fiscal Policy, think…
• Government as in Congress
• Only Congress can tax
• Only Congress can spend tax dollars
When I Say Government, I Mean…
Legislative Branch/Congress
is responsible for
government spending (with
Presidential approval)
Try Not To Get Confused!
Type Controlled By Tools
Fiscal Policy Government/Congress 1. Taxing
2. Spending
Monetary Policy Federal Reserve
Money Supply
1. Open Mkt
Operations
2. Reserve
Requirements
3. Discount Rate
How does the Government get involved?
The govt. is the only thing big enough to offset a downward spiraling economy
The govt. can undertake its own spending to offset the spending in other parts of the economy – like businesses
The government can also lower taxes to increase borrowing and push consumers to spend more
So, if business spending was down $50billion – the government might spend $10 billion building a dam, $20 billion in grants to fix neighborhoods, and $20 billion in other ways
This spending would offset the $50 billion that businesses did not spend
Or – instead of spending, the
government could just reduce taxes
giving consumers and businesses more
purchasing power
Supply Side Policies
Designed to stimulate output and lower unemployment by increasing production NOT by stimulating demand
The key goal here is to reduce the governments role in the economy Reducing federal agencies
Less government spending
Deregulating firms – allowing them to produce at full capacity
Measuring the Economy
Review: What other ways have we discussed that
measure economic health?
Gross Domestic Product (GDP)
Unemployment (Unemployment Rate)
Inflation (CPI)
Many economists also measure the economy by
looking at the government’s budget
The government’s budget is based on how much
money it will spend compared to how much money it
will take in through taxes
What do you think is the goal of the budget?
The Deficit and Debt If the government spends more money than it takes
in for the year, it is operating under a budget deficit
This is more of a prediction – the idea that the
government will have less money in the end
If the government has a deficit, it needs to borrow
money to finance the difference – this is called the
national debt
It is all of the money that the government borrows
to make up for the extra money it spends!
The National Debt Like any borrower, the government must pay interest
on its debt
Today, a big chunk of the government’s tax
revenues go towards paying this interest (in other
words, taxes go towards paying for money that the
government has already spent)
Because money is going towards interest instead of
goods and services, these payments limit the growth
of the nation’s GDP
Thus, economists look at the deficit and debt to
continue measuring our economic health
Who Owes More??
China Owning USA
National Debt
Each time the government
borrows money it adds to the
national debt, the total
amount of money owed by the
federal government.
Is the sum of all past deficits
plus interest.
Thursday, September 21st
Good afternoon!
As you enter, please:
Find your new seat, based on our new data
Then get a Macroeconomics Review
Crossword Puzzle and complete it with your
Quad-mates
Class Updates
• Tutoring – Today!
• Reminders:
• Tomorrow
• Unit 3 Test
• All Unit 3 papers are due
• Monday, October 2nd
• Final Due Date for Econ Budget Project
• EverFi – Final Due Date
• Friday, October 6th
• Final Due Date for ALL Make-up Work
Class Updates
• Econ Budget Project• Phase 4
• Phone, clothing & entertainment
• Phase 5
• Debt Obligations
• Final Turn-In
• Clean, neat versions
• Explanations – for each budget item
• Presentation Folders - $0.75 if you’d like to buy
one!
• I have some change today!
Aggregate Demand & Supply
In individual markets, supply and
demand interact to establish prices. In
the nation as a whole, aggregated
supply and aggregated demand
interact to determine whether the
economy is growing or declining.
How is Aggregate Supply and
Aggregate Demand Different (than Regular Supply and Demand)?
Main difference is that aggregate demand and
aggregate supply are plotted based on total
output, measured as GDP.
So…
Now Let’s Review…
Monetary Policy Vs. Fiscal Policy
Goals Goals
Steady Economic Growth Steady Economic Growth
Stable Prices Full Employment
Now Let’s Review…
Monetary Policy Vs. Fiscal Policy
Who’s in Control Who’s in Control
Federal Reserve Government/Congress
Day-to-Day most Important
is the FOMC
Now Let’s Review…
Monetary Policy Vs. Fiscal Policy
Tools to Use Tools to Use
#1 FOMC - Buying/Selling Bonds #1 Taxing
#2 Reserve Requirement #2 Spending
#3 Discount Rate
Now Let’s Review…Economic Needs Economic Needs
Warming Upin Contraction/ Recession
Cooling Downinflation high, nearing Peak
Warming Upin Contraction/ Recession
Cooling Downinflation high, nearing Peak
Econ Talk: Expansionary Econ Talk:
ContractionaryEcon Talk: Expansionary Econ Talk:
Contractionary
How To Do It?(Big Picture)
Increase money
supply
How To Do It?(Big Picture)
Decrease
money supply
How To Do It?(Big Picture)
Increase money
supply
How To Do It?(Big Picture)
Decrease
money supply
Talking Details #1
Buy Bonds Sell Bonds Lower Taxes Raise Taxes
Talking Details #2
Lower Reserve
Requirement
Increase Reserve
Requirement Increase spending Decrease
spending
Talking Details #3
Lower Discount
Rate Increase Discount
Rate
Let’s Practice!
With your Quad-Mates, answer the questions with
each scenario:
1. Read the scenario
2. Should the government use Fiscal Policy or
Monetary Policy?
3. Once you’ve figured that out… should the
government use expansionary or contractionary
policies?
4. Then list the expansionary or contractionary
policies the government should use.
Focus #3 Check Point If GDP is decreasing
and the
unemployment rate
is increasing, which
fiscal policy should
the government
MOST likely use?
a. Increase taxes
b. Decrease taxes
c. Increase bank
reserves
d. Decrease spending
If the inflation rate is
rising too fast, which
fiscal policy would
make the MOST
sense?
a. Increase taxes
b. Decrease taxes
c. Increase spending
d. Decrease bank
reserves
Focus #1 Check Point A recession is when:
Unemployment
decreases
Real GDP is increasing
The economy is in a
contraction for at least 6
months
Interest rates and prices
are on the increase
If aggregate demand
and real GDP are
beginning to fall and the
unemployment rate is
beginning to rise, what
conclusion can you
draw?
a. The economy is in an
expansion phase
b. The economy is facing a
downturn
c. The economy is in a
recovery
d. Aggregate supply is
increasing
Friday, September 22nd
Time to turn in your Unit 3 Papers!
• Calmly and quickly pull your papers out
• Make sure you have a cover page with your
name on it
• Please staple them and turn it in within 5 minutes
Kahoot!
Time to show what you know and win sweet prizes!
Pull out your smartphone and…
• Log in to a web browser
• Go to Kahootit.com
• Enter our session/game #
• Remember to make sure your game name
includes a recognizable name and is 100%
clean!
What Have We Learned So Far?
• GDP
• Definition
• Formula
• CPI
• Measures inflation• Current Market Basket Cost / Base Year Market Basket Cost x 100
• Unemployment• Four types
• Which is the most harmful?
• Monetary Policy
• Federal Reserve controls the supply of money
• Tools include:
• Open Market – buying and selling bonds/securities
• Discount Rate• Fiscal Policy
• Congress uses taxing and spending powers to help the economy