ECON 200 Lecture 3: Econ 200,University of Arizona,Readings-Notes(p3)
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The growth rate of a nation"s productivity determines the growth rate of its average income. Inflation - an increase in the overall level of prices in the economy. Growth and quantity of money is generally to blame for inflation. In a short period of about two years policy makers will push inflation up hoping unemployment will go down. Increasing the amount of money in the economy stimulates the overall level of spending and thus the demand for goods and services b. Higher demand may over time cause firms to raise their prices, but in the meantime, it also encourages them to hire more workers and produce a larger quantity of goods and services c. more hiring means lower unemployment. Business cycle the irregular and largely unpredictable fluctuations in economic activity, as measured by the production of goods and services or the number of people employed.
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