How the Economy Works Blog

The economy as we know it is in constant fluctuation, so much so that it has become increasingly difficult to predict where our economy is heading in the future. The reason for this is complex, but at its base, it is quite simple. The future is uncertain, we cannot know where we will be in 5, 10, 15 years, all we can do is go with out gut feeling and hope that the future aligns with our instincts (pg. 2 Ip). The state of the economy can be in one of two states. The first is a bull market. A bull market economy occurs when share prices begin to rise, encouraging people to buy more. The second is a bear market. A bear market is the opposite of the bull where prices fall, encouraging more selling. Both of these economic states are constantly contending until a perfect "equilibrium" is found. Throughout history, the economic patterns of the bull and bear market differ. The bear is often used when the country faces a economic disaster such as the Wall Street Crash of 1929 which led to the Great Depression. The bull is used during a relief period of economic recovery from a disaster. These markets only occur during depressions which as results of recessions. Recessions are a short period of economic strife. A depression on the other hand is a prolonged time of economic disaster.