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                             Deflation Occurs Here

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                             Deflation Occurs Here

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Deflation is the general reduction of prices in the economy.
This may seem good to shoppers but eventually in the long run there will be a big drop in demand. You can see deflation by using the CPI (consumer price index). This is a greater threat than inflation. Deflation is bad because it slows economic growth. This puts stress on producers because they have to drop their prices and come up with new prices.

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An increase of prices happens because the economy begins to prosper. The employment rates are high and businesses begin to raise the prices because more people can afford the higher prices. Eventually the prices of everything can get too high and many people can not afford normal things anymore thus starting the whole business cycle.

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Unemployment rates begin to raise, business and there sales begin to improve. Also GDP begins to increase.

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There are high unemployments rates, weak consumer sales, business failures. Also the GDP of the whole economy is much lower.

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Many businesses start to decline and begin to have lower production. Also trade and industrial activity are reduced. Usually by a fall in GDP.

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Study.com, Study.com, study.com/academy/lesson/the-us-economic-boom-of-the-1990s.html.

LearnLoads. “What Is the Business Cycle?” YouTube, YouTube, 8 Jan. 2015, www.youtube.com/watch?v=6XpXsC-yNHI.

Amadeo, Kimberly. “The 4 Critical Stages of the Business Cycle.” The Balance, www.thebalance.com/what-is-the-business-cycle-3305912.

Amadeo, Kimberly. “Deflation Threatens You More Than Inflation.” The Balance, www.thebalance.com/what-is-deflation-definition-causes-and-why-it-s-bad-3306169.

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The boom started in late 1992. The GDP increased from -1.8% to 3.4% and it continued to increase. Coming out of the Great Recession the GDP went from $5.8 trillion to $9.8 trillion in just one year (1990-1991). By the year 2000 the GDP was at an all time high with 7.7% in the boom.
What caused this growth?
1. Globalization and Technology
~There was an increase in the amount of trade between countries. Technology aided in this growth. Also the signing of the North American Trade Agreement helped the growth. This agreement allowed Mexico, Canada, and the U.S to trade easily.
2. Job Creation
23.6 million jobs were created in the 90's. The unemployment rate dropped to less than 5%. it Eventually dropped to 3.8% in 2000.
3. Increased Taxes
The $220 billion dollar deficit we were in turned into a surplus of $70 billion. then two years later it became a $236 billion surplus. When the government had a surplus like this they result to adding infrastructures (highways and bridges)  thus creating more jobs.

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Many of the people in the economy are working and the economy is making money. Unemployment rates are low and  businesses are doing well.

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Recovery is when the unemployment rates begin to rise up and the economy starts to get better

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Depression is when the economy has a long period of downturn.

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Recession is when the economy starts to decline.

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Prosperity is when everything in the economy is good and the country is a financial success.