AP Macroeconomics – The Business Cycle: Introduction to Macroeconomic Indicators

Bell Ringer: Ask students how they think the economy is doing right now — is it "up" or "down"? You can get an idea of where the economy is (i.e., the phase of the business cycle) at http://www.nber.org/cycles.html, the website of the the organization that dates U.S. business cycles.

This lesson from Advanced Placement Macroeconomics (4th Edition), focuses on the study an control of business cycles, which are the heart of macroeconomics. Business cycles are a problem because output fluctuations lead to unemployment and inflation.

Introduction

The study and control of business cycles is at the heart of macroeconomics. This lesson from Advanced Placement Macroeconomics (4th Edition) , introduces students to the phases of the business cycle. Students also learn that business cycles are a problem because output fluctuations lead to unemployment and inflation.

Bell Ringer: Ask students how they think the economy is doing right now — is it "up" or "down"? You can get an idea of where the economy is (i.e., the phase of the business cycle) at http://www.nber.org/cycles.html, the website of the organization that dates U.S. business cycles.

Learning Objectives

  • Understand that the business cycle is made up of ups and downs in the economy.
  • Define the phases of the business cycle.
  • Understand the general meaning of the terms unemployment, inflation, recession, depression, peak, trough, expansion, contraction, and recovery. More detailed understanding and definitions are included in lessons in later units.

Resource List

  • The Business Cycle: Introduction to Macroeconomic Indicators, Teacher Lesson
  • The Business Cycle: Introduction to Macroeconomic Indicators, Student Resource Manual
  • The Business Cycle: Introduction to Macroeconomic Indicators, Solutions

Process

Please refer to the Business Cycle: Introduction to Macroeconomic Indicators Teacher Lesson.

Conclusion

Emphasize these points about business cycles:

  • There is no consistent length of time for each phase.
  • Business cycles are difficult to predict.
  • We are only certain about the phase of the business cycle in hindsight. That is, we can't tell when the economy has reached a peak until after it starts downward, and we can't tell when it has reached a trough until after it starts upward.

Extension Activity

Not available at this time.

Assessment

Please refer to the Business Cycle: Introduction to Macroeconomic Indicators Student Resource Manual.