Essays on What Is a Depression Anyway Assignment

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The paper "What Is a Depression Anyway" is a great example of an assignment on macro and microeconomics.   The economy all around the globe goes through the different highs and lows of business. This results in a change in performance and has a bearing on the way business is conducted. Economies have a business cycle that makes them either in a growth phase or a recession phase. Economies that are in a growth phase are performing excellently and have many opportunities but the recession is an area of concern for all world economies. Recession is defined as a situation when the real gross domestic product (GDP) declines for two or more consecutive quarters (Recession, 2011).

This is a situation where the growth rate might be positive and not negative but the GDP decreases consecutively in two quarters. Using the above definition creates doubt as an economist and certain statistician doubt the validity of the definition as it ignores the following It doesn’ t consider the unemployment rate which might highlight a start of a recession and only after it has happened for two quarters it is judged at inflation (Moffat, 2011) The time span is long so if a recession occurs for a period of 10 months then by the time it will be identified the recession gets over thereby it doesn’ t help to identify recession clearly (Moffat, 2011) This helps to identify recession by finding out different factors like unemployment rate, industrial production, wholesale sales, retail sales, and real income.

This will help to give a better idea about recession and will help to identify the time when it happens (Moffat, 2011). Recession brings a change in consumer perception and has an effect on the market demand for goods and services.

When a consumer expects a recession the demand will fall which is shown in the chart graph below where the quantity demanded has fallen. The above graph shows that the fear of economic recession reduces demand for goods thereby pushing the demand curve downwards as seen from the movement from Qd1 to Qd2. This further aggravates the problem and the economy becomes more susceptible to recession as there is doubt in the minds of the consumer thereby affecting the normal growth pattern.

References

Boyes, W. & Melvin, M. 2008. “Macro economics”, 7th edition, Houghton Mifflin Company

Discus. 2010. When is a double dip recession really a depression? Retrieved on April 15, 2011 from http://expectedreturnsblog.com/when-is-a-double-dip-recession-really-a-depression/

Desmond, M. 2009. What is a depression anyway? Retrieved on April 15, 2011 from http://www.forbes.com/2009/01/14/economy-recession-depression-biz-wall-cx_md_0114depression.html

Free Exchange. 2008. When is a recession not a recession? Retrieved on April 15, 2011 from http://www.economist.com/blogs/freeexchange/2008/08/when_is_a_recession_not_a_rece

Krishnamurthy, B. 2008. Impact of possible US recession on India. Retrieved on April 15, 2011 from http://blogs.hbr.org/cs/2008/01/impact_of_a_possible_us_recess.html

Moffat, M. 2011. Recession? Depression? What the difference? Retrieved on April 15, 2011 from http://economics.about.com/cs/businesscycles/a/depressions.htm

Morgan, S. 2009. America’s vulnerable half speed recovery. Retrieved on April 15, 2011 from http://articles.moneycentral.msn.com/Investing/Extra/americas-vulnerable-half-speed-recovery.aspx

Nicholson, J. 2008. “Interest rate affect on aggregate demand”, Tata McGraw Hill

Recession. 2011. Exactly how bad is it? Retrieved on April 15, 2011 from http://www.newsweek.com/2008/10/15/exactly-how-bad-is-it.html

Raichura, K. 2008. US annualized growth rate: so when is there a recession? Retrieved on April 15, 2011 from http://gavekal.com/dforum/default.aspx?f=2&m=2941

Recession Restart. 2009. What happens to an economy during recession? Retrieved on April 15, 2011 from http://recessionrestart.com/what-happens-to-the-economy-during-a-recession/

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