Chapter 3Economic Activity in a Changing World

Chapter 3Economic Activity in a Changing World

Vocabulary

Gross domestic product (GDP) – (answer)

Standard of Living – (answer)

Inflation – (answer)

Deflation – (answer)

Budget Deficit – (answer)

National Debt – (answer)

Budget Surplus – (answer)

Business Cycle – (answer)

Prosperity – (answer)

Recession – (answer)

Depression – (answer)

Recovery– (answer)

Learning Objectives

1. IDENTIFY how economic activity is measured.

2. EXPLAIN how inflation and deflation work.

3. DISCUSS the four phases of the business cycle.

Why Is This Important?

Economic activity affects everyday life. The history of the economy affects industries and people today and tomorrow.

A major purpose of an economic system is to (answer).

(answer) are used to (answer).

Theses figures are called (answer). They measure:

1. (answer).

2. (answer).

3. (answer).

Goods & Services that satisfy your wants and needs are the (answer)output of an economy. They’re (answer) of all the activity in the country.

Measuring Economic Activity-Ways to Tell How an Economy is Doing

1. (answer)

2. (answer)

3. (answer)

4. (answer)

GDP

An important measure of a country’s economic health is its (answer), or (answer). The total value of the goods and services produced in a country in a given year is called its gross domestic product.

The United States has a very (answer) GDP.

Calculating GDP (4 main areas)

1. (answer)

2. (answer).

3. (answer).

4. Goods and services (answer).

Unemployment Rate

The unemployment rate measures (answer)Changes in the unemployment rate show whether an economy is (answer)

Types of Unemployment

1.(answer)

2.(answer)

3.(answer)

4.(answer)

Rate of Inflation

 Inflation is a general (define)

Inflation CAN happen when an economy is actually too (answer)

The (answer) peopleare employed, the (answer) peoplespend.

As demand goes (answer) producers (answer) their prices.

To pay the higher prices, workers demand (answer)wages.

When wages go up, producers (answer) again to pay for the higher wages.

Deflation –is a general (define).

When an economy produces more goods than people want, it has to lower prices and cut production. As a result, people have less money to buy goods so the demand continues to go down.

SUPPLYdemand = deflation

National Debt

The main source of government income is (answer). Tax money is used to pay for (answer) like (answer).

The total amount of money a government owes is its (answer).

Government Revenue Expenditures = surplus

Government Expenditure Income = budget deficit.

The Business Cycle

Economies go through ups and downs as a result of (answer), foreign competition, and (answer).

Slumps in the economic activity were always followed by a new wave of productivity. This rise and fall of economic activity over time is called the (answer).

Four Phases of theBusiness Cycle

1. (answer)

2. (answer)

3. (answer)

4. (answer)

Business Cycle Model Characteristics:

Prosperity

● (answer)

● (answer)

● (answer)

Recovery

● (answer)

● (answer)

● (answer)

Recession

● (answer)

● (answer)

● (answer)

Depression

● (answer)

● (answer)

Every phase of the business cycle indicates (answer), to industries and (answer).

The economic ups and downs of one country (answer)too.

Depressions are rare (one example of a depression in the United States history is (answer)).