journal: interpret this cartoon, what do you all think the roller coaster symbolizes?
TRANSCRIPT
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Journal: Interpret this cartoon, what do you all think the roller coaster symbolizes?
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Key Terms
– Productivity/GDP: total of all the final products produced in a country
– Stock Market (bull vs bear market): where shares of corporations are bought and sold.
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Employment• Unemployment: measures the people who
can work but do not have jobs.• Full Employment: when all people who can
work have jobs• Underemployment: having a job which you
are overqualified and underpaid for.– Ex: PhD. working at McDonalds
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GDP: Gross Domestic Product
• Total value of all the final products that are produced within a country in one year.
• Final products: a good sold to a user (as opposed to all the ingredients of that product). The car, but not the steel or the rubber that went into making it
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Per Capita GDP• GDP divided by a country’s population
In other words: The GDP per person
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The darker the blue, the better Per Capita GDP. How’s the US doing?
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CPI or the Consumer Price Index• Measures inflation rates
for the nation’s economy– Inflation: the general rise in
price of an item over time.• Is determined by
measuring the price of a standard group of goods meant to represent the “market basket” of a typical consumer.
Market Basket might include cost of….•Food and drinks
• Medical care• Housing• transportation
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How much do these cost?
In March Then
againin
May.Market Basket might include cost of….•Food and drinks
• Medical care• Housing• transportation
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Record Inflation brings living standard to a new low.
• http://www.nbcnews.com/video/nightly-news/26202512#26202512
• Think Pair Share If this trend continues what does this mean for young Americans compared to older Americans? What can we do to alleviate the situation?
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The Stock Market
• Where shares of corporations are bought and sold.– Dividends: money earned by your share of a stock– Capital Gains: money earned when you sell your
stock• Bull Market: Rising• Bear Market: falling
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Bear vs. Bull Market• The Chicago Bears just aren’t
that good and often FALL, just like a bear market.
• When Michael Jordan was on the Chicago Bulls, he would always rise up to dunk just like the rising market.
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Checking for Understanding Matching
• 1. Kelly just graduated from Charlotte Law School 6 months ago, she is working at Banana Republic at South Park Mall.
• 2. Bobby got fired in June he is seeking employment.
• 3. Mayberry is a model town. In the town of Mayberry all 3000 residents are employed.
• Unemployment
• Full Employment
• Under Employment
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The Business Cycle
Peak
Contraction Trough
Expansion
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Contraction (a.k.a. “Recession”)• Economy is DECLINING– Bear market – GDP down
• Unemployment is RISING
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Trough (a.k.a. “Depression”)• Economy is at its LOWEST– GDP at LOWEST
• Unemployment is at its HIGHEST– EX: the Great Depression 1929-1939
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Stock Market Crash1929, “Black Tuesday”
Run on the banks! NO FDIC
Wall St.
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The Great Depression
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The Great Depression1933: unemployment=25%Today: unemployment = 8.6%
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Half Page Reflection: How does the stock market crash compare to recent stock market scares?
• http://www.nbcnews.com/video/nightly-news/27072042#27072042
• http://www.nbcnews.com/video/today-in-history/21409475#21409475
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New Deal: Exploring Programs that were created in response to Great Depression
• http://www.fdrheritage.org/new_deal.htm
• Create a program designed to benefit the economy today.
• Name• Mission statement• 3 Goals Your organization hopes to accomplish. In
detail describe how this will help our society.
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Expansion• Economy is IMPROVING– Bull market– Inflation (CPI rises)– GDP up
• Unemployment is FALLING
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Peak (a.k.a. “Boom”)• Economy is at its HIGHEST– GDP is at its HIGHEST
• Unemployment at its LOWESTEX: the dot com boom in the 1990s
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Warm up
• Why is it a bad thing when the economy grows to fast?
• What are interest rates? If interest rates are lower what does that mean for spending?
• What do liberals and conservative believe in when it comes to government interference in the economy?
• Give one example of government interaction in the economy.
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Federal Reserve
• The Federal Reserve (FED) is USA’S Central Bank
• It Regulates Monetary Policy
• Video– Write down what a Central
Bank is and its mission• Tools of regulating
economy– Write down the 3 tools the
FED usesBen Bernanke- Chairman of FED
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Federal Reserve: How it works.
• http://content.time.com/time/video/player/0,32068,57544286001_1948059,00.html
• http://www.youtube.com/watch?v=yzry6tn0YNI
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Tools of the Central Bank
1. Interest Rates/ Monetary Policy: how much you have to pay if you borrow money
Low Interest Rates: Expand EconomyHigh Interest Rates: Slow Economy
2. Liquidity- providing loans to banks to help stabilize financial systemlender of last resort
• 3. Providing regulation and supervision: keeps financial system healthy by regulating banking system
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Gold Standard
All paper money is backed by goldUS off the gold standard in 1971
Why? Hint: inflation
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Fiat
• Money has value because of law not gold• http://dailyreckoning.com/fiat-currency/
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Fiscal Policy
• Tools used by the elected government to stimulate the economy– Stimulus- money in the economy to help stimulate
it• Spend money to make money
– Examples- taxes (including tax breaks), welfare
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NC Economics How our state makes MONEY !
• Tobacco Farming• Textiles• Research- Research Triangle• Finance/Banking- Charlotte
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Policy making scenario
• In groups of 3-4 people you must decide the best way to use monetary and fiscal policy to fix the problems that you are presented with.
• You must have explain which tools you will use and how you will use those tools to fix the problem at hand.
• You must explain how to use 1 monetary and 1 fiscal policy for your problem
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Scenario #1
• The economy is in contraction. Less people are spending money on items such as houses, cars, ect. The hardest hit are middle class and lower class Americans.
• You must explain how to use 1 monetary and 1 fiscal policy for your problem
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Scenario #2
• The economy is in a rapid expansion. People are spending money at unprecedented rates. Economists are concerned that this rapid economic growth is happening too fast and will soon lead to a bust. You are tasked with slowing the economy gradually.
• You must explain how to use 1 monetary and 1 fiscal policy for your problem
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Supply and demand scenarios
• Create 3 scenarios where the supply and demand curve shift. One must be a supply shift one a demand shift and one a double shift.
• Draw the supply and demand curve for each scenario and solve each scenario.