Republic of uzbekistan andijan machine-building institute fundamentals of business management

Re-stitching 
An economic downturn does not last forever. A pleasant phase of the business cycle begins with 
recovery. In the recovery phase, unemployment decreases, demand for goods and services increases, 
and GDP begins to grow again. 
People start working. Buyers start buying again, believing in their future and themselves. 
Recovery can be fast or slow. If it continues, the nation will prosper. 
Prices of purchase items. 
Have you ever noticed that the size of the item you are buying has decreased, but the price is 
the same? Have you bought new technological products at a lower price than before? All this is the 
purchasing power of your national currency. 
Inflation 
One of the problems that many countries face is inflation. Inflation is an increase in prices over 
general levels. During inflation, purchasing power decreases. If the prices have increased by 5% 
compared to last year, you will be able to buy $100 worth of items this year for $105. This requires 
more money to purchase services and products. Inflation has a noticeable effect on a fixed monthly 
income. Due to inflation, retired people and those whose wages are fixed will have to limit themselves 
to fewer products or services than before. 
Causes of inflation 
A type of inflation occurs when the amount of demand for goods or services is higher than the 
ability to supply them. When large amounts of borrowed money or hard-earned money are spent on 
limited goods, prices rise. Regardless of the increase in monthly wages, the prices of products and 
goods usually increase so fast that the wage earners can never catch up. Many people think that inflation 
is harmful. Buyers will have to pay a higher price for the goods they are buying. Therefore, workers 
have to earn more money to maintain their normal lifestyle. Work 

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producers can charge higher prices for the services and products they sell. If wages begin to rise faster 
than prices, businessmen will have to hire fewer workers and unemployment will begin to rise.