notes the business cycle & inflation. looking at economic cycles illustrates a pattern of good...

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NOTES THE BUSINESS CYCLE & INFLATION

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Page 1: NOTES THE BUSINESS CYCLE & INFLATION.  Looking at economic cycles illustrates a pattern of good times and bad times.  The movement of the economy from

NOTESTHE BUSINESS CYCLE

& INFLATION

Page 2: NOTES THE BUSINESS CYCLE & INFLATION.  Looking at economic cycles illustrates a pattern of good times and bad times.  The movement of the economy from

Looking at economic cycles illustrates a pattern of good times and bad times.

The movement of the economy from one condition to another and then back again is called the BUSINESS CYCLE.

All nations experience good and bad economic times.

WHAT IS THE BUSINESS CYCLE?

Page 3: NOTES THE BUSINESS CYCLE & INFLATION.  Looking at economic cycles illustrates a pattern of good times and bad times.  The movement of the economy from

4 PHASES OF THE BUSINESS CYCLE

Page 4: NOTES THE BUSINESS CYCLE & INFLATION.  Looking at economic cycles illustrates a pattern of good times and bad times.  The movement of the economy from

What is inflation? An increase in the general level of prices.

Buying power decreases Most harmful to people on fixed incomes (retirees)

THE EFFECT ON CONSUMER PRICES

CAUSES OF INFLATION: When demand is higher than

supply. Ex: Newest product releases

Prices rises faster than wages

Page 5: NOTES THE BUSINESS CYCLE & INFLATION.  Looking at economic cycles illustrates a pattern of good times and bad times.  The movement of the economy from

MEASURING INFLATION

In the US, inflation is measured by CPI Consumer Price Index

Compares prices from one year to the next

Mild inflation should be expected every year Mild inflation = 2-3% increase per

year

Deflation – decrease in the general level of prices May occur for the nation overall or

just specific products (computers & TVs)