1. NOTES THE BUSINESS CYCLE & INFLATION

2.  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?

3. 4 PHASES OF THE BUSINESS CYCLE

4.  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

5. 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)