The Economic Cycle Inflation and recession are recurring phases of a continuous economic cycle.
Experts work hard to predict their timing and control their effects.
No Inflation Inflation occurs when prices rise because there's too much money in circulation and not enough goods and services to spend it on. If ten people want new cars and only seven cars are available, the dealer can increase the price because some people will pay more to get what they want. Almost overnight car prices go up. So if ten people now want cars and only seven are available, the cycle begins again. 4 Unemployed people buy less of everything, so the economy slows down.