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Recession
The document defines recession as a temporary economic decline where GDP growth slows, businesses stop expanding, employment and housing prices decline. It then provides more context on market economies and the factors of demand and supply that impact recessions. Specifically, it notes that recession is defined as an economy shrinking for two consecutive quarters with decreasing GDP. The document outlines the difference between recession and depression, as well as steps governments, companies, individuals, and the general public can take to help stop or recover from a recession.
Recession
- 2. ACCORDING TO THEOXFORD DICTIONARY RECESSION MEANS = A TEMPORARY ECONOMIC DECLINE DURING WHICH TRADE & INDUSTRIAL ACTIVITY ARE REDUCED. RECESSION IS DEFINED AS A recession is when GDP growth slows, businesses stop expanding , employment falls , unemployment rises , and housing prices decline.
- 3. Before understanding “Recession”,We need to understand the Market Economy; A) TWO STAGES OF MARKET ECONOMY B) TWO FACTORS OF MARKET:- DEMAND & SUPPLY
- 4. 1. Two StagesOf Market Economy A) GROWING MARKET ECONOMY B) DECLINING MARKET ECONOMY
- 5. A) GROWING MARKETECONOMY
- 6. B) DECLINING MARKETECONOMY
- 7. B) Two FactorsOf Market:- Demand& Supply B) Two Factors Of Market:- Demand & Supply Producer wants his demand always to be HIGH Consumer wants his buying cost always to be LOW Actually, Demand is the price at which consumer is ready to buy and producer is ready to sell Producer Price Consumer Price Usually, we think; Demand = Quantity But, here Demand = Price; This is because, Price decides the Quantity of Sales; Competitive Price = More Demand Incompetitive Price = Less Demand;
- 8. C) What isRecession? Recession is the economy shrinking for two consecutive quarters (=6months) with a decrease in the GDP (=Gross domestic Product) GDP = Value of all the reported goods and services produced by people operating in the country. GDP = MONEY VALUE OF { C+I+G+(X-M)} C = Consumables, I = Gross Investments, G = Government spending, X = Exports, M = Imports If GDP is growing, then market is growing due to increased Demand.
- 9. C) What isRecession & Depression? There is a joke that economists quote to explain the Difference Between “Recession & Depression” RECESSION = When Your Neighbor Loses His Job DEPRESSION = WHEN YOU LOSE YOUR JOB
- 10. BASIC DIFFERENCE BETWEEN RECESSION& DEPRESSION RECESSION is a general slowdown in economic activity over a sustained period of time, or a business cycle contraction If the GDP of a country drops by at least 10% then this can be classed as a DEPRESSION. By these standards, the last depression America suffered was The Great Depression in the 1930's.
- 11. HOW TO KNOWRECESSION? People buying less stuff. Decrease in factory production. Growing unemployment. Slump in personal income. An unhealthy stock market.
- 12. STEPS TO BETAKEN BY THE GOVERNMENT TO STOP RECESSION Control Inflation Encourage Savings Encourage Foreign Direct Investments Encourage Imports of High-Priced Commodities Reduce Government Expenditure And Focus On Infrastructure Development Discourage Borrowings If Inflation Is Ruling High Ensure Peaceful Atmosphere Conducive To Businesses Encourage Exports
- 13. Steps Needed ToBe Taken By Companies To Stop Recession NEW Innovation Offer Attractive Selling Incentives Provide New Employment Opportunities If Not Suffering From Recession Cut Down Expenses
- 14. Steps Needed ToBe Taken By Individuals And General Public To Stop Recession Work More Concentrate On Saving A Penny To Stuff Your Piggy Bank Buy Assets Pay Taxes Promptly Pay Your Debts First Settle On Any Job If You’ve Been Given A Pink Slip On The Current One
- 15. HOPING THIS TIME RECESSIONVANISHES SOON SO THAT INDIA GETS BACK TO ITS STRONGER GDP GROWTH RATE OF 8% TO 10%