Economic growth is a major goal of an economic system. In a growing economy, there is an increasing capacity to produce more goods and services. During periods of great economic growth, consumption must grow evenly, or problems will occur. However, the best type of growth is steady and controllable. The world economy has increased rapidly. During those periods, citizens experience positive economic times and many new businesses are created. When the rate of growth slows down, workers can be laid off and businesses are closed. When too much money and credit are available and too few goods are available to satisfy demand, the dollar loses its value and the prices of goods increase. The country begins a period of inflation. Therefore, consumers must be able to keep pace with the rise in the charge higher prices for them. This circular pattern becomes an inflationary spiral. Inflation still dropping demands must be decreased and credit restricted. However, one result of high inflation is an economic recession. U.S. federal government skillfully guided and adjusted financial instruments that led the United States out of a period of inflation and through a period of economic stability. When too little money and credit are available, and more goods are available than necessary to satisfy demand, the dollar gains value and the prices of goods decrease. Under the circumstances, the economy enters a period of deflation. Then the goods remain unsold, producers’ profits fall. Falling profits leads to layoffs. Unless the situation is right, a recession occurs; if the recession is prolonged, a depression can result. Although the United States has not experienced a depression since 1930s, the U.S. economy has been affected by varying levels of economic challenges in Mexico, Brazil, and Asian countries throughout the twentieth century and into the twenty-first century. Responsible consumers need a basic understanding of the economic system and how it affect their lives as workers and family members.
