1. Business Cycles, Inflation, Recession and Depression

2.  The increase in the amount of goods and services in a country  It is measured every year  Gross National Product or GNP : Total dollar value of all goods and services is added up  This flow of money is necessary for a healthy economy

3.  It can grow if there is: ◦ A large supply of natural resources ◦ A steady growth in population ◦ A free enterprise system where people can find jobs and succeed in their work

4.  It is irregular changes in the level of total output measured by real GDP  GDP (Gross Domestic Product): the total dollar value of all FINAL goods and services produced in a year  There are fluctuations in the economy: ups and downs in the economy (unemployment, inflation)

5.  1 st - Prosperity: most people have jobs, spending is high, businesses grow  2 nd - Recession: gradual slowdown due to less spending and lack of jobs  3 rd - Depression: if recession continues and people lost jobs. Ex: Great Depression  4 th - Recovery: jobs become available, people spend, business improves  5 th - Inflation: prices rise quickly, but incomes do not rise as fast

6.  Inflation: causes prices to rise to a point at which people cannot afford to buy, or may delay buying certain products  Prices of items began to rise faster than your income  Is essentially a devaluing of a nation’s currency

7.  Merchants can’t sell their goods  1. Consumers can’t buy  2. Sales and profits decline  3. Production declines, layoffs occur and some businesses have to close  4. Interest rates rise (go up with everything else)