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Economic Growth

Economic Growth. Business Cycles, Inflation, Recession and Depression. What Is Economic Growth?. 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

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Economic Growth

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  1. Economic Growth Business Cycles, Inflation, Recession and Depression

  2. What Is Economic Growth? • 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. How Can the Economy Grow? • 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. What is the business cycle? • 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. Sample Business Cycle • 1st- Prosperity: most people have jobs, spending is high, businesses grow • 2nd- Recession: gradual slowdown due to less spending and lack of jobs • 3rd- Depression: if recession continues and people lost jobs. Ex: Great Depression • 4th- Recovery: jobs become available, people spend, business improves • 5th- Inflation: prices rise quickly, but incomes do not rise as fast

  6. Inflation • 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. What happens during inflation? • 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)

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