Recession ppt by shoshith

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  • GDP = Value of all the reported goods and services produced by the people operating in the countryGDP = MONEY VALUE OF {C + I + G + (X – M)}C = Consumables, I = Gross Investments, G = Government Spending, X = Exports, M = Imports
  • GDP = Value of all the reported goods and services produced by the people operating in the countryGDP = MONEY VALUE OF {C + I + G + (X – M)}C = Consumables, I = Gross Investments, G = Government Spending, X = Exports, M = Imports
  • Both Producers and Consumers are free to act; Not a forced action
  • What is Reserve Ratio?Each bank has to keep a high % of their assets in RBI (Reserve Bank of India). These assets do not earn any interest to banks. This money kept in RBI is called “Reserves”; RBI sets certain ratio of this reserves and it is called “Reserve Ratio”
  • Recession ppt by shoshith

    1. 1. RECESSION BY SHOSHITH
    2. 2. Road map • • • • What is recession? Causes of recession Impact of recession How to come out of recession.
    3. 3. WHAT IS RECESSION? In economics, the term recession describes the reduction of a country's gross domestic product (GDP) for at least two quarters. The usual dictionary definition is "a period of reduced economic activity"
    4. 4. • In macroeconomics, a recession is a decline in a country's gross domestic product (GDP), or negative real economic growth, for two or more successive quarters of a year
    5. 5. Causes of recessions • Currency crises • Energy crisis • Under-consumption • Overproduction • Financial crisis
    6. 6. Currency crises A currency crisis, which is also called a balance-of-payments crisis, occurs when the value of a currency changes quickly, undermining its ability to serve as a medium of exchange or a store of value. It is a type of financial crisis and is often associated with a real economic crisis
    7. 7. Energy crisis An energy crisis is any great bottleneck (or price rise) in the supply of energy resources to an economy. It usually refers to the shortage of oil and additionally to electricity or other natural resources. An energy crisis may be referred to as an oil crisis, petroleum crisis, energy shortage, electricity shortage or electricity crisis
    8. 8. Underconsumption In underconsumption , recessions and stagnation arise due to inadequate consumer demand relative to the amount produced
    9. 9. Overproduction In economics, overproduction refers to excess of supply over demand of products being offered to the market. This leads to lower prices and / or unsold goods
    10. 10. Financial crisis The term financial crisis is applied broadly to a variety of situations in which some financial institutions or assets suddenly lose a large part of their value
    11. 11. How to know recession? Indicators to say a nation is in recession; • • • - People buying less stuff Decrease in factory production - Growing unemployment - An unhealthy stock market
    12. 12. IMPACT OF RECESSION ON IT SECTOR The impact of Recession is unpredictable. The main effect of recession is in IT sector and is mainly related to the job loss and unemployment
    13. 13. How to come out of recession? It is unhealthy for any nation to be in Recession;So, Government will take certain countermeasures to eliminate or reduce the Effect of recession for turnaround; Important Point: Today, it is a market Economy Producers; Can produce and sell at their prices Consumers; Can decide to buy or not;
    14. 14. But, Government does not have direct control on Producers’ & the Consumers’ behavior; But, they can influence millions of Producers & Consumers with Government’s policies; Government has 2 plans Fiscal Policies (By Govt.) Government influences the economy by changing how it (Government) spends and collects money Monetary Policies (By RBI) RBI manipulates the available supply of money in the country
    15. 15. Fiscal Policies Government influences the economy by changing how it (Government) spends and collects money 1] Tax cuts for businesses or for individuals More money available for spending 2] More Spending by Govt. to create jobs Individuals get salary and spend money 3] Automatic fiscal policy; Unemployment Insurance Some income to unemployed people to spend Demand picks up; Market can recover;
    16. 16. Monetary Policies Government manipulates the available supply of money in the country 1] Reduce reserve ratio More money available for bank to give loans 2] Lower the interest rates Individuals take more loan 3] Use its own reserved money to buy Govt. bonds It becomes an income to Govt. to inject money into the market Demand picks up; Market can recover;

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