THE BUSINESS CYCLEMiss Smith

7th Grade Civics

*pgs. 534-537

THE BUSINESS CYCLE Business cycle- economic pattern in which an economy goes through good times and bad times

Expansion- period of the business cycle marked by growth

Inflation- rise in the cost of goods and servicesPrices inflate/rise when there are more customers to compete for goods and services

THE BUSINESS CYCLECosts of production- business costs such as wages, payments for raw materials, transportation, and interest on money borrowedThis could cause prices to rise

Peak- high point in the business cycle when expansion and inflation stop

Contraction- slow period in business cycle

THE BUSINESS CYCLE

Recession- period in the business cycle when businesses fail, people become unemployed, and profits fall

Trough- lowest point in the business cycle

Depression- very low trough when unemployment becomes very high

THE GREAT DEPRESSION

Took place in the 1930sStock prices fell and banks failedProduction slowed, businesses closedLasted 10 years

THE GREAT DEPRESSION*Do not write

Place the following events leading to the Great Depression in correct order:A) One in four people unemployedB) Stocks fell sharplyC) Banks failed

THE GOVERNMENT’S RESPONSEThe New Deal (established by Franklin D. Roosevelt) included ways to improve the economy. This included the creation of:More jobs (civic construction/building parks and schools, etc.)

The FDIC and SECThe Social Security system