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Word Count: 832
The way a market economy works is that there are market pressures that develop for different commodities The pressures work in one direction for a while but at the same time pressures are budding that work in the opposite direction As people look forward and see theres going to be some profit made from their production theyll make decisions to increase volume usually hiring more people buying more materials often bidding up their prices When people are competing in the same market that tends to generate more and more pressure in the direction of expansion But at the same time as costs and possibly interest rates rise pressures begin to operate in the other direction against profits There is a few terms that you should always know dealing with the economy The first is recession which determines the amount of business activity in the economy by looking at things like employment industrial production real income and wholesale-retail sales You can define a recession as the time when business activity has reached its peak and starts to fall until the time when business activity bottoms out When the business activity starts to rise again its called an expansionary period By this definition the average recession lasts about a year The second term you should know is depression Before the Great Depression of the 1930s any downturn in economic activity was referred to as a depression The term recession was developed in this period to differentiate periods like the 1930s from smaller economic declines that occurred in 1910 and 1913 This leads to the simple definition of a depression as a recession that lasts longer and has a larger decline in business activity Throughout the rest of this paper you will see what kind of state the economy is in now and how it will possibly be in the future Since the horrific day of 9-11-01 we have been in a recession The huge question today is
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