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Unformatted text preview: expansion. Production costs can increase, helping create a rise in prices, and consumers buy less. Inventories accumulate, causing price declines. Manufacturers begin to diminish; workers are laid off. Such factors lead to a period of liquidation, and money is hoarded, not invested. Production cutbacks and factory shutdowns occur. Unemployment becomes widespread. A depression is in progress. Recovery may be initiated by a reawakening in consumer demand or government action to stimulate the economy. Prices rise more rapidly than costs. Employment increases, and people buy more. Investment expands. A new cycle is under way....
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This note was uploaded on 03/10/2011 for the course ECON 101 taught by Professor Duc during the Spring '05 term at Linfield.
- Spring '05