ECON 203

a rise in the overall level of prices.

A drop in the overall level of prices.

A situation in which the overall cost of living is changing slowly or not at all.

The short-run alternation between economic downturns, known as recessions, and economic upturns known as expansion.

The sustained rise in the quantity of goods and services the economy produces.

• when families and businesses are worried about the possibility of economic hard times, they prepare by cutting their spending.
• This reduction in spending depresses the economy as consumers spend less and businesses react by laying off workers.
• As a result, families and businesses may end up worse off than if they hadn’t tried to act responsibly by cutting their spending.

Economic problems are resolved with out intervention from the government.

Argues that a depressed economy is due to inadequate spending and government intervention can help a depressed economythrough

uses changes in the quantity of money to alter interest rates and affect overall spending.

uses changes in government spending and taxes to affect overall spending.

the short-run alternation between economic downturns and economic upturns.

is a very deep and prolonged downturn.

periods of economic downturns when output and employment are falling.

sometimes called recoveries, are periods of economic upturns when output and employment are rising.

The point at which the economy turns from expansion to recession