Economics Unit Three - gpowell6.weebly.com · Class Updates •Unit 2 Test scores are in Synergy! •Congratulations to everyone who did GREAT! •It’s time to update your families

Economics Unit Three

Macroeconomics

Thursday, February 8th

• Good morning/afternoon!

• As you come in, please:

• Sit in your new assigned seat (based on Unit 2 test results)

• Front table – pick up your:

• Unit 3 Objectives/Summary

• Unit 3 – Day 1 Expedition Econ on Learning

Standard SSEMA1

Class Updates

• Unit 2 Test scores are in Synergy!• Congratulations to everyone who did GREAT!

• It’s time to update your families• Today you’ll receive a detailed Progress Report

that shows all our assignments, your scores and you can see if there are any ways to improve your grade

• You need to share this with your family, have them sign it (and you, too) and return it by next Wednesday, February 14th for 25 bonus points!

Another Way to Help Your Grade

Tomorrow we’re invited to attend the Black History Month program.• For those of you who score a 75 or higher on your Unit 2 test,

this seems like a great reward for your hard work!• For those of you who scored a 74 or lower, I’m willing to help you

by giving you a choice:• You can go to the Black History Month program

Or• During class time, complete test corrections to earn half your

points back and get help with concepts you don’t understand

• Either way, I’ll need to sign a note stating which decision you’ve made.

Today’s Learning StandardSSEMA1 Illustrate the means by which economic activity is measured. a. Identify and describe the macroeconomic goals of

steady economic growth, stable prices, and full employment.

b. Define Gross Domestic Product (GDP) as the sum of Consumer Spending, Investment, Government Spending, and Net Exports (output expenditure model).

c. Define unemployment rate, Consumer Price Index (CPI), inflation, real GDP, aggregate supply and aggregate demand and explain how each is used to evaluate the macroeconomic goals from SSEMA1a.

d. Give examples of who benefits and who loses from unanticipated inflation.

e. Identify seasonal, structural, cyclical, and frictional unemployment. f. Define the stages of the business cycle, including: peak, contraction,

trough, recovery/expansion as well as recession and depression.

What do you think would be

good goals for our economy?

Moving from Micro to Macro

https://www.youtube.com/watch?v=wvwgIiP4gjY

https://www.youtube.com/watch?v=wvwgIiP4gjY

Macroeconomics

Macroeconomics is the study of the

behavior of the economy as a

whole. It concerns the business

cycles that lead to unemployment

and inflation, as well as the longer-

term trends in output and living

standards.

Macroeconomic Goals

Output

High level and sustainable growth

Employment High level of employment and low

involuntary unemployment

Stable Prices Predictable & easy to plan for

Key Economic Indicators

The health of the economy and the “big picture” of

economics is measured in several ways

OutputHigh level of

sustained growth

Stable PricesPredictible & easy to

plan with

EmploymentMinimize

unemployment

Measured with real

Gross Domestic

Product (GDP)

Measured with

Consumer Price Index

(CPI)

Measured with the

Unemployment Rate

Let’s think about it…

Gross

Not gross as in…

But gross as in…

Domestic

As in homeland

Product

As in everything

added together

adjective

(of income, profit, or interest) without

deduction of tax or other

contributions; total.

"the gross amount of the gift was

$1,000"

•adverb

1.1.

without tax or other contributions

having been deducted.

verb

1.1.

produce or earn (an amount of

money) as gross profit or income.

"the film went on to gross $8 million

in the U.S“

Gross Domestic Product (GDP)

To compare our system with other countries’

systems, and to compare the strength of our

own economy year to year, economists use

something called the

Gross Domestic Product (or GDP),

which is the total dollar value of

all final goods and services

produced within a country during

one calendar year.

Final Goods?? Final goods are what we buy!

Need to be aware that a lot goes into

making final goods:

Intermediate goods

Raw materials (from planet Earth)

Example:

Final Good Intermediate Goods Raw Materials

Ready to sell &

Consume

Processed to be used

for final goods

From the Earth

Pizza

Final Goods vs. Intermediate &

Raw Materials

Let’s practice!

Work with a neighbor to list the ingredients

and then sort them by whether they’re

intermediate goods or raw materials.


GDP is measured by assessing the total expenditures

(spending) of four different economic sectors:

1. Consumers (C) – Consumer Spending

2. Government (G) – Government Spending

3. Investment (I) – Investments from Industry

4. Net Exports (NX) – Exports Minus Imports

Gross Domestic Product

Famous Economic Formula

GDP= C+G +I+(X-M)

C= Personal consumption expenditures

(consumer spending).

Includes

durable goods: a lifetime of more than one

year, and

non-durable goods: a lifetime of less than

one year, and services.

Durable vs. Non-Durable Goods

What’s Not IncludedAnything

That isn’t a final good or service

previously sold (i.e. used)

produced outside the boundaries of our

country

Produced outside the calendar year

G = Government Purchases

The dollar amount that federal, state, and

local governments spend on items

IE: highways, education, defense, etc.

Government Purchases

Levels of Spending

Federal/National

State

City





country


I = Capital Investment

Total value of all capital goods investment/purchases in a given nation during one year.

Fixed investment: Buildings, machinery, equipment

Inventory investment: raw materials, intermediate goods, final goods

Investment

Fixed Investment Inventory Investment

Raw Materials

Intermediate Goods

Finished Goods





country


Net Exports The reason we subtract our imports from our exports is

this:

Exports - The money other countries spend on our

exports adds value to our economy

Imports - The money we spend on goods imported

from other countries takes money out of our

economy

Exports vs. Imports Goods & services

made in our own

country

Other countries buy

them & add to our

economy

Goods & services

made in other

countries

When we buy other

countries’ goods &

services it does NOT

add to our economy

They use only products produced in the current year. This would exclude things bought at yard sales.

Which of the following was used in the calculation of the GDP in 1999?

A. A car manufactured in 1998 but sold in 1999.

B. A used 1993 Toyota that was sold to Ms. Simpson in Memphis in 1999.

C. A Ford F150 produced in 1999 but sold in 2000.

How Economists Calculate the GDP:

The answer is C again!


They use only items produced within

national borders.

Would this include or exclude

Coca-Cola (a U.S. company)

produced at a plant in Russia?

Exclude

GDP: Is a measure of the health or

strength of our economy

Analyzing GDP – What Does it Mean?!?

If the nation’s GDP increases over time, you can tell that the economy is growing!

That’s a good thing!!

To get an accurate measurement, the calculation depends on two more factors:

Real GDP: the GDP of a nation adjusted for inflation

Nominal GDP: the GDP of a nation beforeaccounting for inflation

So, a nation’s rate of growth is the percentage change

in its real GDP over time

GDP does NOT include: value of used products

value of volunteer work

purely financial transactions

value of intermediary goods

Transfer of assets

Value of non-market activities (DIY)

Underground economies (anything not

reported to the government)

Economic Lowdown - GDP

https://www.youtube.com/watch?v=1Il5IQHcYP8

Friday, February 8th

Good morning/afternoon!

Please come in and we’ll take

attendance.

Those attending the Black History Program

should be released soon!

Class UpdatesQuizlet ready to

use! Unit One reloaded

Unit Two reloaded

Make-ups due

Friday, 2/16

Unit Three ready to

go!

Unit 3

Assessments Formative – next

Friday, 2/16

Summative – Friday,

3/2

Supply and Demand Review Each of you have a poster with four

supply and demand graphs.

Look at the graph facing you and write

down what that graph is telling you

Think – supply increasing or decreasing,

demand increasing or decreasing

Shifter IDsNOW – each group will have a set of

descriptor strips for supply/demand

shifters.

Work with your quad-mates to figure out

which shifter goes with each supply &

demand graph

When you’re done let me know and I’ll come

check it out

Once you have a green light, then glue the

shifters under the correct graph

Then write down all your results in the graphic

organizer!

Unit 2 Test CorrectionsOn your Corrections sheet:

Write down the question # & question to be

corrected.

Then use your resources to find the correct

answer. You can use Unit 2 Master

PowerPoint, your textbook or a Unit 2

Objectives/Info deck to help find the

answers!

Monday, February 12th


As you come in, please:

Sit in your assigned seat

Signed Progress Reports – turn in if you’ve

got it – final due date this Wednesday!

Class UpdatesWednesday

Final due date for signed Progress Reports

Friday

Unit 3 Formative assessment

Macroeconomic Goals mini-posters due

Any Unit 1 or Unit 2 make-up work due

Class Updates This week we’ll be covering key

economic indicators in

macroeconomics

Each day – begin with Econ Expedition,

followed by Hands-On Learning and

Guided Notes for homework (unless you

made an ‘A’ on your Unit 2 summative

First & Fourth Blocks – Unfortunately no ‘A’s’

so everyone does Guided Notes for Unit 3

Second Block – Nine ‘A’s’ – Yay!!

If you earned an ‘A’ you get to choose!

Lots of Hands-On Learning!Remember:

Hands-On Learning Daily

Performance Grades

Thursday seems like a long time ago…

Econ Movies - Back to the Future!

https://www.youtube.com/watch?v=3GTgniuxA50

Doctor’s Check-up

Gross Domestic ProductWhat have we learned:

What does it measure?

Economic output, growth, health

Definition:

Total dollar value only dollars, not units

Of all final goods & services not intermediate or raw materials

Produced within a country domestic

In a given calendar year Jan-Dec calendar

Is This Part of GDP?GDP is made up of many different factors. The Gross Domestic Product isthe value of all final goods and services produced by a countryWhile working in pairs, decide whether you think each economic event below is

included in GDP or excluded from GDP. Number your paper from 1-20. If you

think it is included, place an “I” in the blank. If you think it is excluded, place an

“E” in the blank.

7) Coke donates money to the Susan G. Komen Foundation.

1) Hair cut is purchased.

2) Honda purchases steel for producing new cars.

3) Dell Computers sells computers to Japan.

4) McDonald’s purchases a brand new grill.

5) Macy’s pays its employees an hourly wage.

6) Students purchase airplane tickets to Hawaii.

8) A stereo is purchased on e-Bay.

9) Citizens pay property tax.

10) Government buys supplies for the military.

11) Stay-at-home mothers create community garden.

12) Chevrolet purchases a new factory.

13) Ben & Jerry’s purchases milk for making ice cream.

14) Wall Street traders purchase stocks.

15) Ford Motor Company pays for the land it uses in

production.

16) U.S. citizens purchase oil from Saudi Arabia.

17) Wells Fargo Bank gives a student loan.

18) Wells Fargo Bank is paid interest for the loan it made to

Wal-Mart.

19) Owner of NFL team makes millions in profits.

20) Lemonade is sold at a neighborhood lemonade stand by

8-year olds.

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

Show Answers


What Is GDP?The Gross Domestic Product is the value of all final goods and services produced by a country.

1) It is a measure ofaggregate output defined interms of the current price level.

3) GDP only measures finalproducts, not intermediateones.

4) Intermediate productsare used up when producing afinal product. (Like steel for acar.)

5) Counting only final productseliminates double counting.

2) Useful for makingcomparisons over time orbetween countries.


GDP – What Have We Learned So Far?

Nominal vs. Real GDP

Nominal GDP = GDP at today’s prices, may

be puffed up by inflation

Real GDP = Nominal GDP minus inflation

5% nominal

GDP growth

Minus

3% Inflation= 2% Real GDP Growth

GDPGDP - Fed Reserve of St. Louis

https://www.youtube.com/watch?v=1Il5IQHcYP8

GDP – What’s In & What’s Out Work with a quadmate

On your poster paper:

1. Write the GDP formula

2. Sort your cards into:

1. Is the item part of GDP or not?

2. If so, place it under the correct category on your poster

3. If not, place it off to the side - to the right of your GDP

formula

3. Once you’re sure you’ve got it right, write your

results on your graphic organizer!

4. Please collect your item cards, paper clip them

and give them back to me

Gross Domestic Pizza!NOW let’s practice calculating GDP and

seeing what it tells us!

Each of your groups are now a country

with its own GDP Let’s see who has the largest GDP

How you country likes to use it’s economic

resources!

To do this, we need money or a common currency!

Your currency is a ‘parms’

Gross Domestic Pizza!On your poster paper:

Arrange your GDP formula and descriptions

correctly

Then sort your items by which GDP

category they fall under

Then add up the expenditures (in parms)of

each GDP category. Write your total

parms at the bottom of your poster

Calculate what percentage each category is

of your total GDP

Gross Domestic Pizza!NOW illustrate your GDP composition on

your Gross Domestic Pizza!

Make sure it includes:• Your country name• Each team member’s name

• GDP formula

• Per component

• Total parms

• Grand total

• Total parms

• Color it & make it look great!

Gross Domestic Pizza – 2B

Country C I G NX Total GDP

Cheesaroni $29,500 $7,500 $62,500 -$40,000 $59,500 w/NX

$99,500 w/o NX

Meatopia $48,500 $10,000 $39,500 -$20,000 $78,000 w/NX

$98,000 w/o NX

Calzonia $59,500 $6,000 $27,500 -$10,000 $83,000 w/NX

$93,000 w/o NX

Gigantopia $11,500 $22,000 $94,000 0 $127,500

Pepperonia $100,000 $25,000 $25,000 $30,000 $180,000

Fruitopia $52,500 $16,000 $64,500 -$20,000 $133,000 w/NX

$153,000 w/o NX

Cheeseroni $29,500 $7,500 $62,500 -$40,000 $59,500 w/NX

$99,500 w/o NX



Anchovia $37,500 $7,500 $30,000 $10,000 $85,000

Veggietopia $32,500 $15,000 $51,500 -$20,000 $79,000 w/NX

$99,000 w/o NX

Meatopia $48,500 $10,000 $39,500 -$20,000 $78,000 w/NX

$98,000 w/o NX

Gigantopia $21,500 $22,000 $94,000 $30,000 $167,500

Pepperonia $95,000 $25,000 $25,000 $30,000 $342,500

Fruitopia $52,500 $16,000 $64,500 -$40,000 $93,000w/NX

$133,000 w/o NX

Calzonia $59,500 $3,000 $30,500 -$30,000 $63,000 w/NX

$93,000 w/o NX

What Did You Learn??Come up & write on whiteboard what

you learned today!


Which of these would be counted in the

GDP?

A. A tree cut by a woodcutter who sells it to a

lumber yard.

B. The lumber bought by the lumber yard who

then sells it to a furniture manufacturer.

C. A table made by the manufacturer now sold

to a couple in Detroit, Michigan.

The answer is C

Checkpoint Questions Services such as

mowing the lawn or a

doctor’s visit, fall under

consumption

expenditures as a:

a. Durable good

b. Fixed investment

c. Non-durable good

d. Inventory

investment

At the end of the year, a

bike manufacturing firm

finds that its inventories

of bikes are $15,000

above the amounts of its

inventories last year.

Where would this be

counted in the GDP?

a. Consumption

b. Investment

c. Net exports

d. Government

purchases

Tuesday, February 13th


As you enter, please

Sit in the following groups

Front table – pick up an Expedition Econ for

SSEMA1 c & e on Unemployment.

Complete it using your Unit 3

Objectives/Info Summary

Please note – you’ll need to read the entire

Learning Strand to find info on employment in

both strands.

Also, please turn in any signed Progress

Reports – tomorrow is the last day!

First Block

Group ADalila

Latrice

Jasmine B

Bo

Jasmin D

Miracle

Berenice

Johnneshia

Yasmid

Nykki

Candice

Group BGiovanni

Kearia

Jennifer

Michael

Furquann

Litzy

Amari

Jordan

Katie

Edgardo

Group CRoberto

Destini

Jazzmine C

Keiry

Jose

Aniya

Brianni

Audel

Devionne

Taylor

Second Block

Group AAttallah

Nikolaus

Nyima

Alex

Sergio

Fatima

Pelumi

Chantz

Group BRandy

Bella

Jade

Shaliah

Saige

Sylvester

Jamall

Jose

Group CElijah

Katie

Juan

Michael

Elila

Amy

Aaron

Fourth Block

Group AUriel

Dennis

Janelle

Zakia

Jazzmine

Euler

Latavish

Lawrence

Kiera

Group BJuan

Isaac

Amy

Gloria

Michael

McKenzie

Akim

Rayshaun

Anayah

Group CMildred

Daija

Luz

Kiyah

Eric

Ava

Karla

Orlando

Marcus

Class Updates Tutoring – today and Thursday

Tutoring busses available both days!

Tomorrow:

Last day for bonus points for signed

Progress Reports

Friday

Unit 3 Formative


All Unit 1 or Unit 2 make-up work due

Gross Domestic PizzaWhat did we learn?



Cheesaroni $29,500 $7,500 $62,500 -$40,000 $59,500 w/NX

$99,500 w/o NX

Meatopia $48,500 $10,000 $39,500 -$20,000 $78,000 w/NX

$98,000 w/o NX

Calzonia $59,500 $6,000 $27,500 -$10,000 $83,000 w/NX

$93,000 w/o NX

Gigantopia $11,500 $22,000 $94,000 0 $127,500

Pepperonia $100,000 $25,000 $25,000 $30,000 $180,000

Fruitopia $52,500 $16,000 $64,500 -$20,000 $133,000 w/NX

$153,000 w/o NX

Cheeseroni $29,500 $7,500 $62,500 -$40,000 $59,500 w/NX

$99,500 w/o NX

Which country has the highest

GDP?

Why??



Anchovia $37,500 $7,500 $30,000 $10,000 $85,000

Veggietopia $32,500 $15,000 $51,500 -$20,000 $79,000 w/NX

$99,000 w/o NX

Meatopia $48,500 $10,000 $39,500 -$20,000 $78,000 w/NX

$98,000 w/o NX

Gigantopia $21,500 $22,000 $94,000 $30,000 $167,500

Pepperonia $95,000 $25,000 $25,000 $30,000 $342,500

Fruitopia $52,500 $16,000 $64,500 -$40,000 $93,000w/NX

$133,000 w/o NX

Calzonia $59,500 $3,000 $30,500 -$30,000 $63,000 w/NX

$93,000 w/o NX

Which country has the highest

GDP?

Why??

Today’s Learning Standard SSEMA1 Illustrate the means by which economic activity is

measured.

a. Identify and describe the macroeconomic goals of steady

economic growth, stable prices, and full employment.

b. Define Gross Domestic Product (GDP) as the sum of Consumer

Spending, Investment, Government Spending, and Net Exports

(output expenditure model).

c. Define unemployment rate, Consumer Price Index (CPI), inflation,

real GDP, aggregate supply and aggregate demand and explain

how each is used to evaluate the macroeconomic goals from

SSEMA1a.

d. Give examples of who benefits and who loses from unanticipated

inflation.

e. Identify seasonal, structural, cyclical, and frictional unemployment.

f. Define the stages of the business cycle, including: peak,

contraction, trough, recovery/expansion as well as recession and

depression

What did we learn yesterday?GDP is the total dollar value of all final goods and services

produced within a country during one calendar year.

Formula

GDP = C + G + I + NX

Two Kinds

Nominal and Real

Always want to use Real GDP!

Our Economic Health Measures

Gross Domestic Product Measures a country’s output or productivity

Unemployment Measures how much of our productive resources

(i.e. people!) are being used productively

Tomorrow we’ll look at inflation and the

Consumer Price Index. http://www.investopedia.com/terms/u/unemployment.asp

http://www.investopedia.com/terms/u/unemployment.asp

Question for the dayWhat’s the difference between being

‘layed off’ and being ‘fired’?

UnemploymentRemember when you learned about the production possibilities frontier? In order to produce on the frontier and maximize a country’s potential it is necessary to have all resources working efficiently. This is why employment is critical to economic growth.

So we should start off with some questions:

Who counts as part of our labor force?

How does a country determine the percentage of workers that should be productive but are not?

What is our country’s unemployment goal?

Can you end unemployment?

Are there different kinds of unemployment?

Who counts?

Our labor force consists of everyone 16 and up who is either employed OR actively looking for a job.

It does not include those in the military or those who are unable to work.

Which of these examples would count as a part of the labor force?

1. A stay at home dad

2. A recent college graduate

3. A 25 year old inmate

4. A 15 year old high school student looking for a summer job

5. A 60 year old retired train conductor who is trying to work as a barista

The Labor Force includes…

Who counts?

1. No

2. Yes

3. No

4. No

5. Yes

Which of these examples would count as a part of the labor force?

1. A stay at home dad

2. A recent college graduate

3. A 25 year old inmate

4. A 15 year old high school student looking for a summer job

5. A 60 year old retired train conductor who is trying to work as a barista

1)

2)

3)

Calculating Unemployment

There is a simple formula we can use.

Unemployment Rate =Unemployed Workers

Employed Workers + Unemployed Workers

Did work for pay in the lastweek

Have a job but may havebeen sick, on vacation, etc.

A) Who Are Employed Workers? B) Who Are Unemployed Workers?

1)

2)

3)

Calculating UnemploymentIn the opening activity, you calculated the unemployment rate. There is a simple formula we can use.



Did work for pay in the lastweekHave a job but may havebeen sick, on vacation, etc.

At least 16 years old


1)

2)

3)

4)




Worked less than an hour inthe last week


1)

2)

3)

4)




Worked less than an hour inthe last weekHave actively looked forwork in the last 4 weeks


1)

2)

3)

4)





Worked less than an hour inthe last weekHave actively looked forwork in the last 4 weeksAre available for work


1)

2)

3)

4)






Worked less than an hour in thelast week

Have actively looked for work inthe last 4 weeks

Are available for work

Not in the military or aninstitution

SampleProblem

Skip SampleProblem

Sample Problem

Suppose there are 8 unemployed workers in an economy that has 24 employed workers. What is the unemployment rate in this economy?



Sample Problem




Unemployment Rate =8

24 + 8

Sample Problem





24 + 8


32

Sample Problem





24 + 8


32

Unemployment Rate = 25 %

Take a moment to calculate the unemployment rate in

your classroom

What should unemployment be?

As a class discuss:

What do you think the unemployment rate SHOULD be.

Can the unemployment rate ever be 0%?

Where are we now?1. What is the highest that

unemployment has been since June 2014?

2. Describe the trends in unemployment shown by this graph.

3. How much farther does unemployment need to drop to reach the goal your class agreed on?

US Bureau of Labor Statistics

http://www.bls.gov/news.release/pdf/empsit.

pdf

http://www.bls.gov/news.release/pdf/empsit.pdf

Types of UnemploymentThe Full Employment and Balanced Growth Act of 1978 states a goal of 4% for unemployment, which based on US historical data, is very low.

This goal however does not give us enough information to determine how to address unemployment because there are several different reasons why people in our labor force are unemployed. There are four basic types of unemployment:

• Frictional

• Structural

• Cyclical

• Seasonal

Frictional- this is the most

common type of unemployment, it

occurs when workers are between

jobs and is usually short term. This

type of unemployment will never be

0%.

Examples: someone quitting their

job to find a better one, someone

who gets fired for their

performance, someone who leaves

a job to find one in a different city

Types of Unemployment1. Write down 3

examples of frictional

unemployment.

2. Choose 1 of them to

illustrate on your

paper.

Types of UnemploymentClass Discussion

What should you do if you became structurally

unemployed?

Structural- this type occurs when

there is a change in how the

economy operates due to a change

in consumer tastes and preference

or from new technology or

progress.

Examples: outsourcing production

to China, the change from video

tapes to DVD’s, when people

started buying cars instead of

horses and buggies

Types of UnemploymentCyclical- this type of

unemployment occurs because of

changes in the business cycle

Examples: a banker who lost their

job in 2009 when the bank closed,

a factory worker in Detroit who lost

their job in 2008

Seasonal- this type of

unemployment occurs when work is

dependent on weather or for certain

jobs that are available only certain

times of the year.

Examples: a Six Flags worker in

November, a Toy’s R Us employee

after Christmas

Let’s Practice

Within your group, select the group leader

Group leaders come up to see me

As a group… Each student picks a slip out of their

group’s bag

Read them out loud to the entire group

Work with your group leader to answer

all the questions on your question sheet

Be prepared to share your results with

the class!

1B ResultsGroup Employed Unemployed Total

Pink 0 9 9

Between jobs - 3

Recent college grad - 1

Returning to labor force -1

Lost job - 4

Out of season job 1

Green 10 0 10

Provide services – 10

Underemployed – 1

Over-educated - 3

Yellow 0 9 9

Stopped Looking – 3

Military – 0

Prison – 2

Underage – 1

Retired – 1

Disabled – 1

Student/Stay-at-Home - 2

2BGroup Employed Unemployed Total

Pink 0 7 7

Between jobs – 1

Recent college grads – 2

Lost job to econ downturn

wrong season – 1

Green 8 0 8

Underemployed – 3

Over-educated - 2

Yellow 0 6 6

Stopped looking – 2

In the military – 2

Prison – 1

Student/Stay at home - 1

4BGroup Employed Unemployed Total

Pink 0 7 7

Everyone looking for a job -7

Between jobs - 4

Returning to labor force - 1

Lose their job to layoffs - 4

Out of season - 1

Green 7 0 7

Over-educated - 2

Yellow 0 8 8

Tonight! Finish any classwork you didn’t finish in

class

Complete your Guided Notes for

today’s lesson

Practice your Unit 3 vocabulary with

paper and pencil or Quizlet!

Signed Progress Reports due tomorrow

Unit 1 & Unit 2 Make-up work due Fri

Fri – Formative – Study!!

Unemployment

Guided Notes begin here!

Unemployment

To again monitor the health of our economy,

economists measure the Unemployment Rate.

Each month, they survey certain Americans to

find out their employment status.

The U.S. Government defines “employed” as

people 16 and older meeting one or more of

the following criteria.

Criteria to be considered “Employed”

1. Working for pay or profit for 1 or more hours

this week.

2. Working without pay in a family business 15

or more hours.

3. Having a job, but being ABSENT due to

illness, weather, vacation, etc.

The U.S. Government defines

“Unemployed" as:

1. NOT meeting any of the criteria above

AND

2. ACTIVELY looking for work during the past 4 weeks.

The most closely watched and highly publicized labor force

statistic is

the UNEMPLOYMENT RATE=the percentage of people in

the civilian labor force who are UNEMPLOYED.

Unemployment

rate

unemployed

labor forcex 100=

Measuring Unemployment

Why is there Unemployment? In the end, unemployment depends on supply and

demand – the supply of able workers and the

demand by businesses for those employees

Some, but not all, unemployment is the result of a

downturn in the economy – a change in supply or

demand

Economists classify four different types of

unemployment

4 Types of Unemployment

Structural

Cyclical

Frictional

Seasonal

STRUCTURAL Unemployment

Unemployment that occurs as a result of

changes in technology, consumer

preferences, or in the way the economy

is “STRUCTURED.”

EX: Many TV repairmen had to find new

work as televisions are now built with

transistors instead of tubes.

CYCLICAL Unemployment

This unemployment results from contractions in the economy.

This type of unemployment HARMS the economy more than any other types of unemployment. During the Great Depression, the

unemployment rate reached an all time high of about 25%.

As recently as 2009 and 2010, the unemployment rate reached 10.2%.

FRICTIONAL Unemployment

People who have decided to leave one

job and LOOK for another typically

better job.

Also, new entrants and re-entrants into

the LABOR FORCE.

Economists consider frictional

unemployment as a NORMAL part of a

healthy and changing ECONOMY.

SEASONAL Unemployment

This predictable unemployment

fluctuates as a result of HOLIDAYS, school

breaks, and industry PRODUCTION

schedules.

Checkpoint Questions Joe has recently lost his job

because the factory where he

works has moved its

operations to China. Joe still

wants to work but he realizes

that if he wants to get another

job, he will have to learn how

to work with new technology.

This is an example of…

a. Cyclical unemployment

b. Structural unemployment

c. Frictional unemployment

d. Seasonal unemployment

Toyota shuts down all of its

American factories as it

continues to cut costs to

cover third quarter losses.

What type of

unemployment is

occurring?

Cyclical unemployment

Structural

unemployment

Frictional

unemployment

Seasonal

unemployment

Wednesday, February 14th


As you enter, please:


Last day to turn in your signed Progress

Report!

Front table – pick up your Expedition Econ

for CPI and Inflation – SSEMA1c & d

Class Updates Thursday

Tutoring after school

Tutoring buses running!

Friday

Unit 3 Formative

Study your Unit 3 Summary, Expedition Econs &

Guided Notes, practice your vocabulary, too!


All Unit One & Unit Two make-up work due

Bottom-Line

The Market Basket

What's Up with

Prices?

THE MARKET BASKET

History of United States Postage Rates(Rate for first-class postage for a one-ounce letter)

Source: http://en.wikipedia.org/wiki/History_of_United_States_postage_rates;

http://www.akdart.com/postrate.html.

Date Rate Date Rate

July 6, 1932 3 cents February 3, 1991 29 cents

August 1, 1958 4 cents January 1, 1995 32 cents

January 7, 1963 5 cents January 10, 1999 33 cents

January 7, 1968 6 cents January 7, 2001 34 cents

May 16, 1971 8 cents June 30, 2002 37 cents

March 2, 1974 10 cents January 8, 2006 39 cents

December 31, 1975 13 cents May 14, 2007 41 cents

May 29, 1978 15 cents May 12, 2008 42 cents

March 22, 1981 18 cents May 11, 2009 44 cents

November 1, 1981 20 cents January 22, 2012 45 cents

February 17, 1985 22 cents January 27, 2013 46 cents

April 3, 1988 25 cents Currently 50 cents

http://www.akdart.com/postrate.html

THE MARKET BASKET

Inflation is a general, sustained upward movement of prices for goods and services in an economy.

The price level is the average of prices at a specific point in time compared with the average of prices at another point in time.

As a result of inflation, it takes more money to buy the same goods and services. Inflation means prices go up!

The Bureau of Labor Statistics (BLS) is a federal agency that collects and analyzes economic data. It is responsible for measuring labor market activity, working conditions, and price changes in the economy to provide information for private and public decision-making.

THE MARKET BASKET

Bureau of Labor Statistics

THE MARKET BASKET

After collecting and analyzing data, the BLS reports price changes using the consumer price index (CPI). The (CPI) is a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services. The CPI measures changes on a monthly basis.

The CPI reflects all the ups and downs of millions of individual prices.

THE MARKET BASKET

The CPI seldom mirrors a particular

consumer's experience.

The CPI inflation rate can be determined comparing the percentage increase in the price level of goods and services from one time period to another.

Inflation

rate

Annual CPI Inflation Rate Formula:

CPI later year ─ CPI earlier year

CPI earlier year

THE ARKET BASKETTHE MARKET BASKET

X 100

THE MARKET BASKET

What’s included in the CPI?

The CPI Market Basket is often referred to as “all items index.” Although it does not include literally all items, it includes a representative selection of consumer goods and services. Items are divided into more than 200 categories, arranged into eight major groups:

•Food and beverages •Housing •Apparel •Transportation •Medical care •Recreation •Education and communication•Other goods and services

THE MARKET BASKET

The Eight Major Groups of the CPI

Food and beveragesHousingApparelTransportationMedical careRecreationEducation and communicationOther goods and services

Examples

Breakfast cerealMilkCoffeeChickenWineFull-service mealsSnacks

THE MARKET BASKET

THE MARKET BASKET


Food and beverageHousingApparelTransportationMedical careRecreationEducation and communicationOther goods and services

Examples

Rent of primary residenceOwners' equivalent rentFuel oilBedroom furniture

THE MARKET BASKET

THE MARKET BASKET



Examples

Men’s shirtsWomen’s sweatersWomen’s dressesJewelry

THE MARKET BASKET

THE MARKET BASKET



Examples

New vehiclesAirline faresGasolineMotor vehiclesInsurance

THE MARKET BASKET

THE MARKET BASKET



Examples

Prescription drugsMedical suppliesEyeglassesEye careHospital services

THE MARKET BASKET

THE MARKET BASKET



Examples

TelevisionsToysPets and pet productsSports equipmentAdmissions

THE MARKET BASKET

THE MARKET BASKET



Examples

College tuitionPostageTelephone servicesComputer softwareComputer accessories

THE MARKET BASKET

THE MARKET BASKET



Examples

Tobacco Smoking productsHaircutsManicuresFuneral expenses

THE MARKET BASKET

THE MARKET BASKET

What’s not included in the CPI?

The CPI excludes taxes (such as income and Social Security taxes) not directly associated with the purchase of consumer goods and services.

THE MARKET BASKET

Income tax

Social Security taxes

Life insurance

The Market Basket

Transportation

RecreationOther goods

and services

Apparel

Housing

Education and

communication

THE MARKET BASKET

What is inflation?

Inflation is a general rise in the level of prices over time.

How does inflation affect purchasing power?

If a consumer's personal income stays the same or increases at a slower rate than inflation, the consumers aren't able to buy the same goods and services. Inflation will also reduce the value of people's savings if the interest rate at which the savings grows is less than the rate of inflation.

THE MARKET BASKET

How is the inflation rate calculated?

New CPI – Older CPI X 100Older CPI

What is the CPI ?

The CPI is a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services. The CPI measures changes on a monthly basis.

THE MARKET BASKET

Food and beverages, housing, apparel, transportation, medical care, recreation, education and communication, and other goods and services

What is the role of the BLS?

The BLS is a federal agency that collects and analyzes economic data. It is responsible for measuring labor market activity, working conditions, and price changes in the economy to provide information for private and public decisionmaking.

What are the categories of consumer spending included in the CPI and the core CPI?

THE MARKET BASKET

Actions that satisfy consumers’ wants

Agency that collects economic data

Percentage change in the average price level

Person who uses goods and services

Measures the change in the price level from one time period to another

Objects that satisfy consumers’ wants

A general rise in prices

The CPI less food and energy

Services

Inflation

CPI

BLS

Consumer

Inflation rate

Core CPI

Goods

THE MARKET BASKET

Actions that satisfy consumers’ wants

Agency that collects economic data

Percentage change in the average price level

Person who uses goods and services

Measures the change in the price level from one time period to another

Objects that satisfy consumers’ wants

A general rise in prices

The CPI less food and energy

Services

Inflation

CPI

BLS

Consumer

Inflation rate

Core CPI

Goods

THE MARKET BASKET

Directions for Class Memory Game:

The object of the game is to recall the eight groups used to measure the CPI and determine to which of the eight groups each picture belongs.

In numerical order, look at a picture and name the group to which it would belong. After naming the group, click on the picture to check the answer. Click the “back” button and repeat until all eight pictures have been categorized.

THE MARKET BASKET

1 2 3

45

67 8

THE MARKET BASKET

Transportation

Back

THE MARKET BASKET

Other goods and services

Back

THE MARKET BASKET

Recreation

Back

THE MARKET BASKET

Housing

Back

THE MARKET BASKET

Food and beverages

Back

THE MARKET BASKET

Medical care

Back

THE MARKET BASKET

Apparel

Back

THE MARKET BASKET

Education and

communication

Back

A Word About Interest

Interest is the cost of borrowing money.

Different Perspectives

You need a bank loan When you deposit money in a savings account

For You The interest you pay the bank for the loan is the cost of borrowing money

Their interest is your ‘profit’ (i.e. your money is growing)

For the Bank Your interest is their profit Bank pays YOU interest for depositing your money in their bank

Who is hurt and who is

helped by inflation?

Helped or

Hurt

In Summary (write this down!)

Individuals who receive fixed incomes

are HURT by inflation

Lenders and savers

People who make fixed payments are

HELPED

borrowers

1. Banks extend many

fixed-rate loans. (think of

Bernie the bank owner)

HURT

The money the bank receives

for the loan repayment will be

less in real terms (purchasing

power) than the loan amount.

2. A farmer buys machinery with

a fixed-rate loan to be repaid

over a 10 year period.

HELPED

Farmer makes payments that

are less in real terms than the

loan amount.

3. A family buys a new home

with an adjustable-rate mortgage

that is above the rate of inflation.(Think of Jerome)

HURT

The amount you pay each month

will increase as inflation

increases.

4. A widow lives entirely on

income from a fixed-rate pension. (Think of Helga)

HURT

The purchasing power of the

income will be less as inflation

continues to deflate the value of

the dollar.

5. A retired couple lives entirely on income from a

pension the woman receives from her former

employer that includes a cost of living adjustment

(COLA) thought her union. (Think of Theresa)

HELPED

The purchasing power of the

pension payment will be higher

then the inflation rate because of

the COLA.

6. The federal government has a

five billion dollar debt.

HELPED

The government will repay the

debt with money that has less

purchasing power.

7. A firm signs a contract to provide

maintenance services at a fixed rate for the

next 5 years.

HURT

Revenue from contract will be

worth less.

8. Your friend rents an apartment

with a 3 year lease.

HELPED

Rent payments will remain the

same even if prices go up.

Unanticipated Inflation

Work with a quad-mate to sort the scenarios

by whether inflation hurts or helps

Then capture your results on your graphic

organizer!

Now Let’s Live It! Each quad will be selecting one

category of the CPI Market Basket

On a clean sheet of paper, brainstorm as

many examples that fit that category

Then select your top five options

Then decide a fair price for each item

Mini-Poster

Write your CPI Category Name at the top of the

mini-poster

Then write your top five items and their prices on

your mini-poster!

Time to Go Shopping!Using your CPI Example sheet, walk

around and pick your favorite three

items from each category.

Write your 3 favorites and their prices on

your sheet and come back to your seat to

finish up!

Once seated, add up your Market Basket

total costs

Now Let’s Find Your CPI!Now write in the costs of your items from

2008 (ten years ago)

Add up the 2008 total Market Basket Costs

Use the following formula to calculate your

CPI

X 100CPI = cost of today’s market basket

cost of a market basket in previous time

Guided Notes Start Here!

Consumer Price Index The Consumer Price Index (CPI) is a measure of the

change in prices in an economy

Economists add up the total price of a “market

basket” of typical items bought by the average

family in a month

Then, they compare the total price of these goods

to the total price of the same items during a base

period (or previous year) by dividing the total by

the base

Then, they multiply the result by 100 to have an

index figure for comparison purposes

CPI = cost of today’s market basket

cost of a market basket in previous timeX 100

Let’s Look at an Example…

Let’s say that in 2006, a year that we would

like to serve as our base year, the market

basket cost $960

Then, we measure the same goods again in

2007 and find that they cost $1000

So, it works out like this:

CPI = 1000

960

CPI = 1.04 X 100

CPI = 104

X 100Remember, this number is an index figure. By itself, it doesn’t tell us much. We compare it to 100 (the base number integer that is always used) to figure out the percentage change!

Calculating Percentage Change

So, when we compare to our base integer of

100, we see that there has been a 4%

increase in prices:

We end up with 4/100, or 4%

If in this same year, GDP rose by only 4%, then we

know that there was no real growth – the change

was only due to inflation

However, if it grew by more than 4%, then the

economy did actually grow!

104 – 100

100

CPI Index

from

calculation

Base CPI integer that

is always used

Inflation and Growth

On the other hand, if prices increase but the

economy does not grow, a condition called

stagflation occurs. Stagflation is when there is

high inflation, the economic growth rate

slows and unemployment remains high.

Inflation and Growth

High inflation hurts wage earners because the

money they make is now worth less

Some businesses may offer cost-of-living

adjustments for their employees to balance

out the effects of inflation

Thursday, February 15th




Front table – pick up your Expedition Econ

for Business Cycles and complete it using

your Unit 3 Summary

Class Updates Tutoring

Today – After School

Tutoring buses running!

Friday

Unit 3 Formative


ALL Unit 1 and Unit 2 make-up work

Including vocabulary

Code Red/Lockdown Drill Given the current events, there will be an

impromptu Code Red drill today or tomorrow.

Let’s make sure everyone knows what to do:

An adult will call the Police

Everyone turns OFF their phones (nothing that

would alert an intruder of where we are or

activate an explosive device)

Close and lock all doors, cover door windows

Silently, calmly go to the area of the classroom

which can not be seen from a doorway

Stay in place (silently) until we’re told it’s okay (this

will be administrator to teachers in person)

What Have We Learned So Far?

• GDP

• Definition The total dollar value of all final goods and services produced within a country during one calendar year.

• Formula

• C + G + I + NX = GDP

• What does it measure?• Output, productivity, growth

• We measure spending, because if people are

buying then someone’s making it, too!


• Inflation• What is it?

• Measured by CPI – Consumer Price Index

• What is the ‘Market Basket’?

• Purchasing Power – how far does our money go?• When prices/inflation goes up – what happens to our

purchasing power? Purchasing Power goes down

• When prices go down – what happens to our purchasing

power? Purchasing Power goes up

• Winners and Losers• Winners – ex. Borrowers

• Losers – Lenders/Banks

• Inflation in 2 Minutes

https://www.youtube.com/watch?v=-pwincsv4E0


• Unemployment

• What’s ‘employed’?

• What defines ‘unemployment’?

• 4 types

• Frictional • normal, got the training, in between jobs

• Structural• Job is outsourced, replaced by tech, need

new training

• Cyclical • worst kind, downturn in overall economy

forces layoffs

• Seasonal• Part-time, holidays only, peak sales periods


• Aggregate Demand• Demand for ALL goods & services

• Aggregate Supply• Supply of ALL goods & services

• Total output = GDP

Now That We Understand Our Measurements…

Measures Measurement Tool

Growth, Output, Productivity GDP

Unemployment Unemployment Rate

Inflation/Costs CPI

Now we need to see what the ‘measurements’ tell us!

Today’s Learning Standard

SSEMA1 Illustrate the means by which economic activity is

measured. a. Identify and describe the macroeconomic goals of steady economic growth,

stable prices, and full employment.

b. Define Gross Domestic Product (GDP) as the sum of Consumer Spending,

Investment, Government Spending, and Net Exports (output expenditure

model).

c. Define unemployment rate, Consumer Price Index (CPI), inflation, real GDP,

aggregate supply and aggregate demand and explain how each is used to

evaluate the macroeconomic goals from SSEMA1a.

d. Give examples of who benefits and who loses from unanticipated inflation.

e. Identify seasonal, structural, cyclical, and frictional unemployment.

f. Define the stages of the business cycle, including: peak,

contraction, trough, recovery/expansion as well as recession

and depression.

By Understanding the Measurements We

Understand the Health of Our Economy

Economies ‘flow’ in a continuous rhythm of

good times and not-so-good times

What’s a Cycle?

Does a roller coaster car every go away from the tracks?

I hope not!

Does the roller coaster car keep going around & around?

Well, yeah!

So that’s how a roller coaster is like a cycle…it keeps going around and around!

A Business Cycle Keeps Going…

Round and round, but

with some ups and

downs!

Today we’re going to

look at those ups and

downs.

Business Cycles Fluctuations in Real GDP are referred to

as Business Cycles.

The duration and intensity of each

phase of the Business Cycle are not

always clear.

Business Cycles are typical of Market,

Capitalistic economies due to the free

nature of those economic systems https://www.youtube.com/watch?v=6XpXsC-yNHI

https://www.youtube.com/watch?v=T5seDnLO6M4

https://www.youtube.com/watch?v=6XpXsC-yNHI

https://www.youtube.com/watch?v=T5seDnLO6M4

United States Business CyclesThe graph below illustrates the business cycles that have occurred in the United States over the last 62 years.

Note that this graph shows the change in the real GDP growth RATE.



1) U.S. recessions began ineach of the following years:

1953 1958 1960 1969

1973 1980 1990

2001 2007

1981

Troughs




1953 1958 1960 1969

1973 1980 1990

2001 2007

1981

Troughs

2) Recessions have lasted onaverage about one year.




1953 1958 1960 1969

1973 1980 1990

2001 2007

1981

Troughs

2) Recessions have lasted onaverage about one year.3) Periods of expansionbetween recessions lastabout 5 years.

Peaks



1953 1958 1960 1969

1973 1980 1990

2001 2007

1981

2) Recessions have lasted onaverage about one year.3) Periods of expansionbetween recessions lastabout 5 years.4) In the long run, the U.S.economy has steadily grown.

Phases of the Business Cycle Expansion/Recovery

Peak

Contraction/Recession

Trough

Expansions are periods of increasing

Real GDP.

Unemployment decreases, businesses

expand, consumer demand and

consumption increases.

As expansions continue, there tend to

be upward pressures on prices

(inflation) and interest rates.

Expansions

During ExpansionsAs a general rule, the following events occur during expansions.


1) GDP Increases

Aggregate output increases aspeople begin to demand moregoods and services.


1) GDP Increases


2) Unemployment DecreasesIn order to supply consumerswith increased demand,producers must hire moreworkers.


1) GDP Increases


2) Unemployment DecreasesIn order to supply consumerswith increased demand,producers must hire moreworkers.

3) Inflation Increases

Because more money is beingspent, the overall price level forthe economy increases.

A Word About Interest Rates The amount of money charged as a fee

for lending money.

The price of borrowing money.

As interest rates rise LESS consumers will

borrow money IF they are WILLING and

ABLE

As interest rates fall MORE consumers

will borrow money IF they are WILLING

and ABLE

A Word About Interest

Interest is the cost of borrowing money.

Different

Perspective

s

You need a bank loan When you deposit money

in a savings account

For You The interest you pay

the bank for the loan is

the cost of borrowing

money

Their interest is your ‘profit’

(i.e. your money is

growing)

For the Bank Your interest is their

profit

Bank pays YOU interest for

depositing your money in

their bank

Peak

A peak is a period when the economy

starts to level off.

Businesses postpone new investments,

and consumer saving tends to increase.

Rising prices and interest rates tend to

restrict purchases and investments,

often leading to a Contraction.

Contraction

A Contraction is a

period of declining Real GDP.

Consumer spending decreases, causing

businesses to cut production and

unemployment increases as businesses layoff

workers and shorten work hours.

Interest rates and prices level off, and often

decline during long contractions.

During ContractionsAs a general rule, the following events occur during contractions.


1) GDP DecreasesAggregate output (total finalgoods and services produced)decreases during economicdownturns.



2) Unemployment Increases

Because the amount of goodsand services produced decreases,fewer workers are needed.



2) Unemployment Increases

Because the amount of goodsand services produced decreases,fewer workers are needed.

3) Inflation Decreases

Because fewer goods andservices are purchased, the pricelevel in the economy decreases.

Recession:

Six months of declining Real GDP

Depression:

Twelve months of declining Real GDP

coupled with at least 15%

unemployment.

Long Term Contractions

TroughA Trough is the bottom of a

Contraction. Lowest interest rates and

prices bring customers back to markets.

% Change in Real GDP

Contraction

Expansion

Peak

Trough

0%

Business Cycle Card SortWork with a partner to:

1. Draw your business cycle

2. Label the phases:

Trough, expansion, peak and contraction

3. Sort your description cards and determine which

business cycle phase it matches

4. Then you’ll be given a second set of description

cards with additional ways you might see this

information shared. Figure out where they go

5. When you’re good-to-go, write down your

findings in your Business Cycle Graphic Organizer!

Friday, February 16th




Turn in: Stack #1: Macroeconomic Goals mini-posters Stack #2: Any Unit One or Unit Two make-up work

After you’ve turned in your assignments, get a

laptop and wait for further instructions


• GDP

• Definition

• Formula

• CPI

• Inflation

• Unemployment

• 4 Types

• Aggregate demand & aggregate supply• Business Cycle

• 4 parts

Any Last Minute Questions??

Time for Quiz Mode

Please:• Shut down ALL electronics and pack them away

• We’ll be taking our Formative Quiz with the laptops and will use Zipgrade bubble sheet if the laptops don’t cooperate

• As always…until the last test is completed:

• No electronics

• No talking

• No walking

• No squawking

• No gawking!

Time for Quiz Mode

Please:

• Shut down ALL electronics and pack them away

• We’ll be taking our Formative Quiz with the

laptops and will use Zipgrade bubble sheet if the

laptops don’t cooperate

• As always…until the last test is completed:

• No electronics

• No talking

• No walking

• No squawking

• No gawking!

NearPod

Now use your favorite web browser to go to

Nearpod.com and join our session!

Quizlet Live!

Now use your favorite web browser to go to

Quizlet.com and join our session!

Monday, February 26th

Welcome Back!

I hope everyone had a great Winter Break!

As you enter, please:

• Sit in your regular assigned seat – I’ll have a

new seating plan tomorrow!

• Front Table – pick up an Expedition Econ for

SSEMA2 and complete it using your Unit 3

Summary

Class Updates

Synergy

• All grades updated

• Includes: Unit 2 papers, all Unit 1 & 2 Make-up

Work

Important Upcoming Dates

• Friday

• Unit 3 Summative

• All Unit 3 classwork, homework & vocab due

• Will get Cover Page on Wednesday

Class Updates

Economics Milestones

• Big Days – 3/20 and 3/21!!

Heading Toward the Finish Line!

• Friday


• All Unit 3 classwork, homework & vocab due

• Will get Cover Page on Wednesday

• Next Week – Unit 4 – International Economics

• Following Week – Unit 5 – Personal Finance

• Finish Line!

Unit 3 Formative Assessment

Yes – you took this before we left for Winter Break!

Yes – your scores are already in Synergy

Just a few wrinkles…• Bad news - My iRespond base died that day

• Good news – Based on my iRespond ‘death’ I was given a brand new iRespond kit which should hopefully work wonderfully!

• Cobb County School District still wants to see how you did, sooo…

• I’m going to hand back your Zipgrade bubble sheets and a brand-

new iRespond clicker so that you can click in your answers into

iRespond and we can make CCSD happy!

• Also, if you were absent the day we took the Formative you NOW

have a wonderful opportunity to make it up in class (rare and

wonderful at the same time!)

• Fast and easy peasy!

Unit 3 Formative Assessment

As always, unless EVERYONE is done:

• No electronics

• No talking

• No squawking

• No walking

• No gawking

• Once you’re done, raise your hand

• I’ll collect your papers and iRespond clicker

• Give you today’s Expedition Econ so we can

continue with today’s lesson

Now Where Were We??

BEFORE Winter Break we began

our unit on Macroeconomics – it

may seem like a long time ago

soooo….

We assess and measure our economy’s ‘health’ with

the three key economic indicators:

• Output/productivity GDP

• Prices/inflation CPI

• Unemployment Unemployment Rate

These help us understand where we are in the business

cycle…

What’s the Difference?

https://www.youtube.com/watch?v=Y5jr_zv2Y9M

https://www.youtube.com/watch?v=Y5jr_zv2Y9M

What’s the Goal?

Macro – Big, Bad Info Summary

• Quickly sort your Key Economic Indicator cards

based on what’s happening at each phase in

our Business Cycle

• Then record your results on your Big, Bad Info

Summary

• Please put your Sorting Cards back together

with the paperclip so they can be used again


SSEMA2 Explain the role and functions of the Federal Reserve System.

a. Explain the roles/functions of money as a medium of exchange, store

of value, and unit of account/standard of value.

b. Describe the organization of the Federal Reserve System (12 Districts,

Federal Open Market Committee (FOMC), and Board of Governors).

c. Define monetary policy.

d. Define the tools of monetary policy including reserve requirement,

discount rate, open market operations, and interest on reserves.

e. Describe how the Federal Reserve uses the tools of monetary policy

to promote its dual mandate of price stability and full employment,

and how those affect economic growth.

What is this used for?

Econ Talk – Medium of Exchange





What Should I Pay For This?

Econ Talk – Unit of Value

How do I save?

Econ Talk – Store of Value

What is the difference?

Functions of Money

Money is any good that is widely accepted in

exchange of goods and services, as well as

payment of debts.

Three functions of money are:

1. Medium of exchange: Money can be used for buying and

selling goods and services. If there were no money, goods would have

to be exchanged through the process of barter (goods would be

traded for other goods in transactions arranged on the basis of mutual

need). Such arrangements are often difficult.

2. Unit of value: Money is the common standard for measuring

relative worth of goods and service.

3. Store of value: Money is the most liquid asset (Liquidity measures

how easily assets can be spent to buy goods and services). Money’s

value can be retained over time. It is a convenient way to store

wealth.

Characteristics of Money

Portable

Durable

Divisible

Uniform

Limited

Acceptable

MoneyCredit Cards

Credit cards represent a loan. The card (or the

number) is simply a way to access a line of credit.

On the other hand, a debit card is a way to spend

checkable deposits, just like a paper check.

Money, Money, Money!As you have learned, the economy

operates around money Before 1913, hundreds of national banks

could print as much paper money as they wanted, as often as they wanted!

They could also loan out money when times were good, or refuse to loan money when times were bad

These practices made huge profits for bankers, but greatly hurt the economy as a whole!

So, the government created a solution…

The Federal Reserve System

A special bank, referred to as The

Federal Reserve (“the Fed”),

was established in 1913 to help

control the money supply (or, the

amount of money) in the economy

These tasks are called monetary policy – or, the

regulation of the amount of money available in the

economy

The Fed does this in order to promote economic

growth and full employment to limit the impact of

inflation and recessions

These are called the “goals” of monetary policy!

Structure of the Fed

The Fed is often discussed as the nation’s central bank – but, it is actually a system

The Federal Reserve System is made up of 12different banks in various regions of the nation

Each of these banks is able to print paper money, called Federal Reserve Notes

The system as a whole is run by a Board of Governors, who are appointed by the U.S. President

The Chairman of the Federal Reserve is Jerome Powell

The monetary policy of the Fed is decided and enforced by the Federal Open Market Committee (FOMC)

Other Fed Responsibilities Another huge task that the Fed is responsible

for is controlling what the banks can and

cannot do

They do this to make sure that banks are all playing

by the same rules!

The most important job is to tell the banks how

much of their money must be held in the form of

reserves

Reserves are money that the bank must keep in

its vault instead of loaning out for a profit!

Why do you think it’s important for banks to hold

some money as reserves?

Monetary Policy Goals

Independent but Connected

Roles of the Federal Reserve

1. The Fed supervises member banks

(basically all commercial banks)

2. It holds cash reserves which are

available for short-term

borrowing by other commercial

banks (to avoid ‘bank runs’)

3. The Fed manages the amount of

money in the overall economy (to

achieve their economic goals)

Organization of the Fed

The structure of the Fed is based on the

concept that control of monetary policy

should not be politically or geographically

concentrated/dominated


Nationally(level at which major decisions are made)

Board of Governors

1. Run the Federal Reserve

2. Supervise banking services and regulate the

supply of money in the economy

3. Board members are appointed by the

President - 14 year terms. (7 members total)

4. The Chairman of the Board is appointed to a 4

year term.

Current Chairman of the Federal Reserve is Jerome Powell (great name!)


Regional/District Level 12 District Banks supervise Federal Reserve Bank

control over 12 different geographic regions of the

United States.

All commercial

banks in the

United States are

members of the

Federal Reserve.

Functions of the Fed

Tuesday, February 27th



Sit in your NEW assigned seats (based on

Unit 3 Formative results)

Front Table – pick up your SSEMA2

Expedition Econ and complete it using your

Unit 3 Summary

Class Updates

Important Dates to Remember:• Tutoring – Tuesdays (today ) and Thursday!

• Do what you can to improve your grade

• Get ready for your Unit 3 test

• Friday


• All Unit 3 classwork/homework & vocabulary

due

• Milestones Test

• Set for 3/20 and 3/21

• 20% of your grade

• Almost to the Finish Line!

• Next week – Unit 4 – International Economics

• Following week – Unit 5 – Personal Economics

• Then it’s time for the Milestones test!

Question…

How many of you would be better off with more

money?

This may be true for YOU, but it may not be true for

everyone!

Fallacy of Composition – what’s true for the individual

is also true for the whole…

A common pitfall in economic thinking!

Let’s Live This and See!

We’re going to see if everyone is better off if

everyone receives more money.

We’re going to have three auctions for three

identical bags of candy, one sold in each round.

#1 #2 #3

Our Currency for This

Voluntary Exchange Will Be…

Value 10 cents per black eyed pea!

Let’s Go!

Round #1

Each student - 5 Black-Eyed Peas

= $.50/student x # of Students

= Amount of ‘Money’ in our Economy

Winning Bid for Cookie Bag

Round #2

Each student – 5 more Black-Eyed Peas

= $1.00/student x # of Students



Now Let’s Increase Our

Money Supply by Adding…

Value $0.10 perBlack-Eyed Pea

Value $1.00 cents perKidney Bean

Let’s Go!

Round #1

Each student - 5 Black-Eyed Peas - $0.10 per

= $.50/student x # of Students



Round #2

Each student – 5 more Peas - $0.10 per




Round #3

Each student – 5 Kidney Beans - $1/per




So…is more money being better

true for everyone??

There was a larger supply of ‘money’, but there was

still the same amount of goods.

The amount of money alone had no impact on the

amount of goods available, only in the price of the

goods.

What term have we studied describes this situation?

Inflation!

Monetary Policy Strategies

Monetary Policy Seeks to

Control Aggregate Demand

The Fed expands/increases

and contracts/decreases the

money supply in an attempt

to influence the cost of

credit/borrowing.

Aggregate demand for

products/services will then be

affected.

Easy (Expansionary) - Money Policy

Designed to expand the money supply and

increase aggregate demand.

As demand increases new jobs will be

created reducing unemployment and

promoting economic growth.

Interest rates are low to encourage

borrowing

Tight (Contractionary) - Money Policy

Slows business activity

when the economy starts

to overheat and helps

stabilize prices.

This policy is started by the

Board of Governors when they

believe that too much money is creating

inflation.

Interest rates would be high

in order to suck money out

of the economy.

Tools of the Federal Reserve

The Federal Reserve

has several ‘tools’ they

can use to help our

economy:

1. Federal Open Market

Committee

2. Reserve Requirements

3. Discount Rate

Federal Open Market Committee (FOMC)

Regulates the money supply by buying and

selling securities, or bonds

Securities or bonds are documents issued by the

government for which you pay a set price now, in

exchange for a higher fixed amount (called the

“face value”) later

When securities are bought and sold, this is called

an “open-market operation”

A bond usually “matures” – or can be exchanged

for its face value – in 5, 10, or 20 years

Buying Bonds

Increases money supply

Lowers Interest

Rates

Selling Bonds

Decreases money supply

Interest RatesGo Up

Federal Open Market Committee

Federal Open Market Committee (FOMC)

When the economy is in a recession, the

Federal Reserve will try to stimulate consumer

demand by buying bonds to increase the

money supply

The money that it pays for these securities then

goes into the banking system, and thus, increases

the money supply to the public

When banks have more money to lend, they lower

their interest rates which makes borrowing more

afforadable

Down the line, the point of the Fed’s actions are to

encourage economic growth!

Remember Inflation? Sometimes, though, the problem in the

economy is that it’s growing too fast

This leads to a rapid increase in prices, and could

lead to overproduction

Then, the Fed will sell bonds to the public, and

keep the money they pay for them as

reserves in their vaults

This lowers the money supply available to the

public in order to curb inflation and control

production rates (leads to higher interest rates)

So, the use of securities is a give and take!

Reserve Requirements

Another tool of the Federal Reserve is

reserve requirements. Reserve requirements are the amount of consumer

deposits that banks have to hold in ‘reserve’ for an

average amount of daily withdrawals.

Acts as a protection from ‘runs on the bank’

Our current reserve requirements are 12%.

Reserve Requirements If the Fed wants to increase the money

supply they can lower the discount rate

Banks have more money to lend out

If the Fed wants to decrease the money

supply they can increase the discount

rate

Banks have less money to lend out

One More Tool…

The Fed may also regulate the money supply

through the discount rate

The discount rate is the interest rate that the

Federal Reserve charges other banks to lend them

money

When the discount rate is high, banks don’t borrow

as much money and they charge higher interest to

the public (lower money supply)

When the discount rate is low, banks want to

borrow more money to make more profit on loans

(higher money supply)

Checkpoint QuestionsMonetary policy is BEST described as

a. Benefits received by employees in addition to

wages and salaries

b. Actions by the Federal Reserve System to expand

or contract the money supply

c. A system that relies on supply and demand to

determine the value of one currency to another

d. Actions by the federal government to use

spending and revenue collection to influence

the economy

Checkpoint Questions The Federal Reserve uses various

measures to change the money supply

and encourage economic activity. This

is referred to as

a. Fiscal policy

b. Monetary policy

c. Demand economics

d. Supply side economics

Checkpoint Questions

All of these are ways in which the

Federal Reserve System can

a. Control the stock market

b. Regulate the money supply

c. Decrease consumer spending

d. Challenge Presidential Power

Setting the discount and interest ratesEstablishing reserve requirements for banksBuying and selling US government securities (stocks and bonds)

Monetary Policy Flowcharts

CloserCrash Course - Monetary Policy

(9:00min)

https://www.youtube.com/watch?v=1dq7mMort9o

Wednesday, February 28th


Class Updates

Inflation and Monetary Policy

The Federal Reserve and its monetary policy is all about

managing the amount of money in our economy.

When the money supply increases, it’s important that it

grows at an appropriate rate –

not too fast and not too slow.

Monetary Policy Tools to Manage Money Supply

Monetary Policy

Tools

Increase Money Supply

Loose/Expansionary

Monetary Policy

Decrease Money Supply

Tight/Contractionary

Monetary Policy

Discount Rate Lower > borrowing is

cheaper

Increase > borrowing is more

expensive

FOMC Buy Govt Bonds Sell Govt Bonds

Reserve

Requirement

Lower > Banks have more

money to loan out

Raise > Banks have less money

to loan out

Interest on

Excess Reserves

Lower – Banks want to loan

more

Raise – Banks want to loan less

Is There Anything Else We Can Do?

Now that we understand what the Federal Reserve

can do to help our economy and make the business

cycle less volatile…is there anything else we can do??


SSEMA3 Explain how the government uses fiscal policy to

promote price stability, full employment, and economic

growth. a. Define fiscal policy.

b. Explain the effect on the economy of the government’s taxing and spending decisions in promoting price stability,

full employment, and economic growth.

c. Explain how government budget deficits or surpluses

impact national debt.

What is Fiscal Policy?

Fiscal policy is the government’s attempt to

influence or stabilize the economy through taxing

and government spending

Fiscal Policy, think…

• Government as in Congress

• Only Congress can tax

• Only Congress can spend tax dollars

Try Not To Get Confused!

Type Controlled By Tools

Fiscal Policy Government/Congress 1. Taxing

2. Spending

Monetary Policy Federal Reserve 1. Open Mkt Operations

2. Reserve Requirements

3. Discount Rate

Demand Side Policies Fiscal policies are designed to increase

employment by stimulating demand

Why/How does the Government

get involved?

The government is the only thing big enough to offset a downward spiraling economy

The govt. can undertake its own spending to offset the spending in other parts of the economy – like businesses

The government can also lower taxes to increase borrowing and push consumers to spend more

So, if business spending was down $50billion – the government might spend $10 billion building a dam, $20 billion in grants to fix neighborhoods, and $20 billion in other ways

This spending would offset the $50 billion that businesses did not spend

Or – instead of spending, the

government could just reduce taxes

giving consumers and businesses more

purchasing power

Supply Side Policies

Designed to stimulate output and lower unemployment by increasing production NOT by stimulating demand

The key goal here is to reduce the governments role in the economy Reducing federal agencies

Less government spending

Deregulating firms – allowing them to produce at full capacity

Measuring the Economy

Review: What other ways have we discussed that

measure economic health?


Unemployment (Unemployment Rate)

Inflation (CPI)

Many economists also measure the economy by

looking at the government’s budget

The government’s budget is based on how much

money it will spend compared to how much money it

will take in through taxes

What do you think is the goal of the budget?

The Deficit and Debt

If the government spends more money than it takes

in for the year, it is operating under a budget deficit

This is more of a prediction – the idea that the

government will have less money in the end

If the government has a deficit, it needs to borrow

money to finance the difference – this is called the

national debt

It is all of the money that the government borrows

to make up for the extra money it spends!

Our National Debt – in real time

http://www.usdebtclock.org/#

http://www.usdebtclock.org/

The National Debt

Like any borrower, the government must pay interest

on its debt

Today, a big chunk of the government’s tax

revenues go towards paying this interest (in other

words, taxes go towards paying for money that the

government has already spent)

Because money is going towards interest instead of

goods and services, these payments limit the growth

of the nation’s GDP

Thus, economists look at the deficit and debt to

continue measuring our economic health

National Debt Each time the government borrows money it

adds to the national debt, the total amount

of money owed by the federal government.

Is the sum of all past deficits plus interest.

National Deficit vs. National Debt

Who Owes More??

China Owning USA

https://www.youtube.com/watch?v=MQfejG57LkA

https://www.youtube.com/watch?v=JlkLhVo3PbY

Deficit vs. Debt

Thursday, March 1st

Let’s Review!Monetary Policy

What is it?

Controlling the amount of money supply in an

economy to promote price stability &

employment

Who does it?

Federal Reserve Bank System

Word Clues

Monetary Policy = Money Supply in Economy

Federal Reserve

Tools They Use:

Let’s Review – Monetary Policy! Word Clues

Monetary Policy = Money Supply in Economy

Federal Reserve

Tools They Use: Federal Reserve

Monetary Policy

Tools

Ways They Can:

Increase Money Supply

Ways They Can:

Decrease Money Supply

FOMC – Open Market

Buying/Selling Govt Bonds

Buy Bonds(more money in the

economy)

Sell Bonds(less money in the

economy)

Reserve Requirement – How

much $$ banks have to

‘reserve’ for withdrawals

Lower Reserve

Requirement(banks can loan out

more money)

Increase Reserve

Requirement (banks has less money

for loans)

Discount Rate – interest rate

the Fed charges member

banks for loans

Lower Discount Rate(Cheaper to borrow

money)

Raise Discount Rate(more expensive to

borrow money)

Possible Scenario #1

Suzy Q deposits $1,000 into her bank savings account

Question

How much of Suzy Q’s money can the bank now

lend to others in exchange for earning interest.

Answer

10% - required reserve - $100

90% - available for new loans - $900


Overall economy in extended expansion phase and

close to ‘over-heating’.

Question

What can the Fed do to ‘cool down’ the economy

and avoid the Peak phase and moving into a

contraction?

Answer

Reduce the money supply by:• Selling bonds – consumers turn in their money in exchange

for a government bond or

• Raise the discount rate – increases the cost of borrowing• Raise the reserve requirement – banks have less money to

loan out


Overall economy in extended contraction phase

and needs to be ‘warmed-up’.

Question

What can the Fed do to ‘warm up’ or stimulate the

economy and help increase demand/spending?

Answer

Increase the money supply by:• Buy bonds – consumers turn in their government bonds in

exchange for money or

• Lower the discount rate – decreases the cost of borrowing

• Lower the reserve requirement – banks have more money to loan out

Now Let’s Review…

Monetary Policy Vs. Fiscal Policy

Goals Goals

Steady Economic Growth Steady Economic Growth

Stable Prices Full Employment



Who’s in Control Who’s in Control

Federal Reserve Government/Congress

Day-to-Day most Important

is the FOMC



Tools to Use Tools to Use

#1 FOMC - Buying/Selling Bonds #1 Taxing

#2 Reserve Requirement #2 Spending

#3 Discount Rate

Now Let’s Review…Economic Needs Economic Needs

Warming Upin Contraction/ Recession

Cooling Downinflation high, nearing Peak

Warming Upin Contraction/ Recession

Cooling Downinflation high, nearing Peak

Econ Talk: Expansionary Econ Talk:

ContractionaryEcon Talk: Expansionary Econ Talk:

Contractionary

How To Do It?(Big Picture)

Increase money

supply


Decrease

money supply


Increase money

supply


Decrease

money supply

Talking Details #1

Buy Bonds Sell Bonds Lower Taxes Raise Taxes

Talking Details #2

Lower Reserve

Requirement

Increase Reserve

Requirement Increase spending Decrease

spending

Talking Details #3

Lower Discount

Rate Increase Discount

Rate

Let’s Practice!

With your Quad-Mates, answer the questions with

each scenario:

1. Read the scenario

2. Should the government use Fiscal Policy or

Monetary Policy?

3. Once you’ve figured that out… should the

government use expansionary or contractionary

policies?

4. Then list the expansionary or contractionary

policies the government should use.

Focus #3 Check Point If GDP is decreasing

and the

unemployment rate

is increasing, which

fiscal policy should

the government

MOST likely use?

a. Increase taxes

b. Decrease taxes

c. Increase bank

reserves

d. Decrease spending

If the inflation rate is

rising too fast, which

fiscal policy would

make the MOST

sense?

a. Increase taxes

b. Decrease taxes

c. Increase spending

d. Decrease bank

reserves

Fiscal vs. Monetary Policy

Focus #1 Check Point A recession is when:

Unemployment

decreases

Real GDP is increasing

The economy is in a

contraction for at least 6

months

Interest rates and prices

are on the increase

If aggregate demand

and real GDP are

beginning to fall and the

unemployment rate is

beginning to rise, what

conclusion can you

draw?

a. The economy is in an

expansion phase

b. The economy is facing a

downturn

c. The economy is in a

recovery

d. Aggregate supply is

increasing

Friday, March 2nd

Time to turn in your Unit 3 Papers!

• Calmly and quickly pull your papers out

• Make sure you have a cover page with your

name on it

• Please staple them and turn it in within 5 minutes

• Are you ready?

• Or would you like to review really quickly?

A Super Quick Review!

What have we learned?

• Economic Measures

• GDP• Definition, formula, what does it measure?

• Unemployment• Four types, • unemployment vs. employment

• CPI• Inflation, prices

• Business Cycle• 4 stages – Clue Words

• Trough – lowest (GDP, prices, etc.), bottom

• Recovery/Expansion – rising (GDP, prices, etc.), , increasing, improving

• Peak – highest (GDP, prices, etc.),

• Contraction/Recession – decreasing (GDP, prices, etc.), ,

increasing unemployment

A Super Quick Review!

What have we learned?

• Monetary Policy• Federal Reserve, controlling the money supply,

• Tools: FOMC (buying/selling of bonds), Reserve

Requirement, Discount Rate

• Fiscal Policy• Government/Congress/President,

• Tools: taxing & spending

• Key terms:• Contractionary (reduce money supply or cool down the

economy)

• Expansionary (increase money supply or warm up the

economy)

• Aggregate Demand & Aggregate Supply• Remember - GDP measure on x-axis

Testing Tips

Plus, circle ‘clue words’ to stay

refocused on them

Let’s Practice!

Which statement BEST describe the U.S. government’s monetary policy

and fiscal policy?

A. Monetary policy refers to the Federal Reserve’s influence in the

economy through spending and creating a deficit; fiscal policy

refers to the government’s authority to increase taxing.

B. Monetary policy refers to the Federal Reserve’s authority to

increase spending; fiscal policy refers to the government’s

authority to increase the reserve requirements for banks.

C. Monetary policy reflects the Federal Reserve’s authority to

change the money supply; fiscal policy reflects the government’s

power to influence the economy through taxes, expenditures,

and borrowing.

D. Monetary policy reflects the Federal Reserve’s authority to

change spending; fiscal policy reflects the government’s power to

influence the money supply by buying and selling of government

bonds.

Kahoot!

Time to show what you know!

Pull out your smartphone and…

• Log in to a web browser

• Go to Kahootit.com

• Enter our session/game #

• Remember to make sure your game name

includes a recognizable name and is 100%

clean!

Let’s Shift Into ‘Test Mode’

1. Power down all electronics and pack them away

2. Put your book bag/purse at the front of the room

(all you need is a pencil)

3. When you get your bubble-sheet make sure you

got the correct one!

You Are Now in ‘Test Mode’

Today we’ll be testing with bubble sheets and hand-

held clickers.

Remember (until the last materials are turned in):

• No electronics

• No talking

• No squawking (no disruptions)

• No walking (raise your hand & I’ll come to you)

• No gawking (eyes on your own paper)

USA Test Prep

Bonus Point Opportunity!

Over the Fall Break, you can

practice and help get ready for

your Final Exams while you also

earn Bonus Points!!

Just log into USATestPrep.com

and complete the following:

Unit One – Fundamentals

Unit Two – Micro Economics

Unit Three – Macroeconomics

Complete the FollowingVocabulary Practice

Games

VideosTests

Score 80% or higher on a test

and I’ll replace your Unit Test with that grade!!


• GDP

• Definition

• Formula

• CPI

• Measures inflation• Current Market Basket Cost / Base Year Market Basket Cost x 100

• Unemployment• Four types

• Which is the most harmful?

• Monetary Policy

• Federal Reserve controls the supply of money

• Tools include:

• Open Market – buying and selling bonds/securities

• Discount Rate• Fiscal Policy

• Congress uses taxing and spending powers to help the economy

Unit 3 TestRemember!

No talking

No squawking (no disruptions)

No gawking (eyes on your own paper)

No walking (raise your hand & I’ll come to

you) – until all tests are turned in.

All multiple choice answers are to be bubbled

in on your Zipgrade answer sheet.

Documents

Economics Unit Three - gpowell6.weebly.com · Class Updates •Unit 2 Test scores are in Synergy! •Congratulations to everyone who did GREAT! •It’s time to update your families