A brief introduction about the Business Cycle.

1. The Business Cycle By: Anthony H . & Max Z. Teacher: Ms. Hale

4. Who is affected by this? - Often, in a business cycle, multiple countries which share major relations (in terms of trade, assistance) with a superpower (such as the United States, China) often are hardest hit - As these countries experience the 4 phases, other countries follow suit - During the 1930s, as American stocks plummeted, our stocks dropped immediately; when their employment rose, our employment rose as well Figure 3.1 Good days in America bring good days at home (American flag, 1920s stock market – Canadian flag, Ford Model A dealer)

5. Where does it occur? - The business cycle occurs within the economies of every nation - Depending on a country’s economic strength, their cycle may influence or be influenced by Figure 4.1. Influences the United States has upon other countries (Clockwise: U.K., Africa, India, Japan)

6. When does it happen? - Even though this is referred to as a “cycle”, there is no time boundaries for each of the 4 stages - In other words, the Business Cycle is more “reoccurring” rather than “periodic” e.g. Over the past few decades, the recession stage has occurred in 1974, ’87, ’91, 2001 and ’08, showing no pattern within its intervals Figure 5.1. Example of recessions or downturns

7. Why are there business cycles? - Business cycles occur because of uneven growth within different parts of an economy - When those sectors create increases or downturns, they eventually spread to other parts of the economies and create each stage - In 1929, the rapid growth and decline of the American financial markets created changes within the amount of money which people had - That led to effects within the sectors of manufacturing, retail, farming, etc. Figure 6.1. Results from the Stock Market Crash of 1929 (Left: Panic on Wall Street) (Right: Bennett Buggies and welfare lineups)

8. How did the Business Cycle impact Canada? - Due to the various stages of the cycle, Canada’s economy became very unstable between 1920 to 1940 - During the Prosperity period (1920-October 1929), the American GDP rose from $570 billion to $820 billion at its peak; Canada, undoubtedly, experienced similar changes but at a smaller scale - When the Recession period hit (1929-1933), unemployment rates dramatically increased, profits from corporations plunged from $396 million into $98 million in debt and the average yearly income in Ontario dropped from $549 to $310 Figure 7.1. Major inventions and industrialization created many employment opportunities (Left to right: Penicillin, airplanes and highway construction)

9. - At the peak of the Great Depression (1929-1939), nearly 30% of working Canadians were unemployed, creating massive demand at soup kitchens and large populations within relief camps in the West - Sadly, our Recovery period (1933-1938, 1939 and after) came only at the hands of World War II when unemployed men entered the military, government spending on equipment increased and many war industries started again to satisfy the increasing demand overseas Figure 8.1. Men eating their meals at soup kitchens Figure 8.2. Temporary shelter at relief camps