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Econ (Business Cycle)
8
Transcript
The Business Cycle
By: Jacob Wyffels
Boom/Expansion
(when real GDP goes up)
Circle of good times
People have
more money
People spend more money
Business hires more
(pay more)
Business earns more money
Business makes more products
WWI & WWII
Big Events
new inventions
more credit
stocks up
more trade
Small Events
nineties
baby boom
roaring twenties
Super Boom
Recession/Contraction
(when real GDP goes down)
Circle of bad times
people have less money
business hires less (pay less)
people spend less money
business makes less products
business earns less money
covid
stock crash
9/11
Big Events
stocks down
less trade
Small Events
Super Recession
great depression
great recession
stagflation
Goal = stay on the good as long as possible
Circles are not absolute
Not 100% of Americans on circle
Cycles are usually 6 months - 3 years
Business cycle
Too good/too fast/too much money in circle
Inflation
Not good enough/too slow/not enough money in circle
Unemployment rate %
Good = 4-5% Bad = 8-9%
Unemployment
Done by federal reserve
"the fed"
central bank of USA
control money supply
Monetary policy
Raise -
- tight
- fight inflation
Lower -
- easy
- fight unemployment
Interest rates
% in vault
Raise -
- tight
- fight inflation
Lower -
- easy
- fight unemployment
Reserve requirement
Sell bond -
- tight
- fight inflation
Buy bond -
- easy
- fight unemployment
Open market operation
Done by law
pres + congress agree
Fiscol policy
Less -
- fight inflation
- lose jobs
More -
- fight unemployment
- cause inflation
Government spending
Raise -
- fight inflation
- lose jobs
Lower -
- fight unemployment
- cause inflation
Tax policy
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