Economics lesson 14

How does *depression* happens

 

4 depressions -1818 -last a couple years
                                  1838 - "    "     "    "
                                 1893 - "    "     "    "
                                 1930 - lasts for as decade 
                                          " Great depression"

 

Inflation - the rising of prices
Deflation - the lowering of prices
When deflation happens too rapidly, the its
considered a problem or abnormal
Ex:gas going to $5.00
* prices goes up, unemployment goes down
*prices go down, unemployment goes up

 

Recession-economy takes a down turn.

 

*GDP- Gross Domestic Product
total of all goods and services produced "in" a country
*GNP- Gross National Product
all the goods and services produced "by" a country
*CPI- Consumer Price Index
allows us to track prices over a standard list

 

-unemployment- should be at about 5%

 

Housing start-building a house indicates that
people has money (more houses, more people)

 

* 3 groups that can take money in-out
-FED - takes money out of the system
-Congress-
- People - put in by spending it
                  take out by saving it
                 banking it and
                 pocketing it
 
Ex:
Steps toward depression
1. crop prices drop
2. farmers have less money to buy factory goods
3. factory has goods left over
4. unemployment increases

 

How to stop this???
Put money into the system