Journal: Interpret this cartoon, what do you all think the roller coaster symbolizes?

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.

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

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

Per Capita GDP• GDP divided by a country’s population

In other words: The GDP per person

The darker the blue, the better Per Capita GDP. How’s the US doing?

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

How much do these cost?

In March Then

againin

May.Market Basket might include cost of….•Food and drinks

• Medical care• Housing• transportation

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?

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

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.

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

The Business Cycle

Peak

Contraction Trough

Expansion

Contraction (a.k.a. “Recession”)• Economy is DECLINING– Bear market – GDP down

• Unemployment is RISING

Trough (a.k.a. “Depression”)• Economy is at its LOWEST– GDP at LOWEST

• Unemployment is at its HIGHEST– EX: the Great Depression 1929-1939

Stock Market Crash1929, “Black Tuesday”

Run on the banks! NO FDIC

Wall St.

The Great Depression

The Great Depression1933: unemployment=25%Today: unemployment = 8.6%

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

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.

Expansion• Economy is IMPROVING– Bull market– Inflation (CPI rises)– GDP up

• Unemployment is FALLING

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

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.

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

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

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

Gold Standard

All paper money is backed by goldUS off the gold standard in 1971

Why? Hint: inflation

Fiat

• Money has value because of law not gold• http://dailyreckoning.com/fiat-currency/

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

NC Economics How our state makes MONEY !

• Tobacco Farming• Textiles• Research- Research Triangle• Finance/Banking- Charlotte

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

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

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

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.