UNDERSTANDING

Business I n a G l o b a l E c o n o m y

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Part 2:

Classification of E c o n o m i c C o n d i t i o n s

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Prosperity Employment rate and demand for products and services are high.

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Recession Unemployment rate is increasing and demand for

products and services are lowering.

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Depression Unemployment rate is high and demand for products and services is lowering.

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Recovery Unemployment rate is lowering and demand for products and services is increasing.

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Changing

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Conditions

Inflation An increase in the general level of prices.

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Deflation An decrease in the general level of prices.

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Consumer

An decrease in the general level of prices.

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Price

Index A measure of the average change over time in the prices paid

by consumers for consumer goods and services.

Interest Rate The cost of borrowing money.

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