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