Essay on features of economic recession

In fact, the reckless policy of artificial credit expansion that central banks led by the American Federal Reserve have permitted and orchestrated over the last fifteen years could not have ended in any other way. The expansionary cycle that has now come to a close was set in motion when the American economy emerged from its last recession in and the Federal Reserve embarked on a major artificial expansion of credit and investment, an expansion unbacked by a parallel increase in voluntary household saving. For many years, the money supply in the form of banknotes and deposits M3 has grown at an average rate of over ten percent per year which means that every six or seven years the total volume of money circulating in the world has doubled. The media of exchange originating from this severe fiduciary inflation have been placed on the market by the banking system as newly created loans granted at extremely low and even negative in real terms interest rates.

Essay on features of economic recession

In the post war period UK economic growth has been characterized by the boom and bust economic cycles. A period of growth is followed by high inflationary growth and then a downturn in the economy. However since the UK has experienced a long period of economic growth, the longest period of uninterrupted growth this century.

It appears the UK has temporarily avoided the threat of recession, but although forecasts remain positive there are many factors that could push the UK into recession.

Possible causes of a recession could include: Fall in house prices. The UK economy has a strong dependency on the housing market. Most people own a house, renting is not common like on the continent.

If house prices were to fall there would be a negative wealth effect which would adversely affect consumer spending and cause a fall in AD. Some people say house prices are overvalued because of speculation.

However others argue the UK market remains strong because of shortage of supply and constant demand. However the housing market is very susceptible to even a small rise in interest rates.

Essay on features of economic recession

If interest rates rise it would increase mortgage costs and there would be a big fall in demand and therefore consumer spending. In addition record levels of consumer borrowing means the economy is likely to be significantly affected by any rise in interest rates.

The savings ratio is at an all time low. If interest rates were to rise then it would cause great pain to consumers.

Essay on features of economic recession

Decline in Manufacturing sector. For a long time the UK manufacturing sector has becoming more uncompetitive with the rest of the world. Mainly because of competition from Asian countries with lower labour costs.

Government borrowing is high. To meet the shortfall the Govt may have to increase taxes. This would have the effect of reducing consumer spending.

If the world economy slows down there will be less demand for British exports and also reduced economic confidence. This is very significant with increased globalisationThe components of the federal budget changed significantly around the Great Recession.

However, the federal budget itself hasn’t seen as dramatic of a change, according to a recent Economic Synopses essay.. Senior Economist Fernando Martin first looked at four key variables of the federal budget: revenues, outlays, deficit and debt held by the public.

The good news is that the post-recession cutting seems largely to have ended. Most states have restored at least some funding in recent years, and total spending has begun to rise.

Economic Crisis in Europe: The European economy is in the midst of the deepest recession since the s, with real GDP projected Main features of the Commission forecast 27 II The Commission forecast by country 27 III Crisis policy frameworks: a conceptional illustration ECONOMIC ANALYSIS A firm under oligopoly faces a kinked demand curve (see figure 2).

The point of the kink is the point of the established market price. The kink of the demand curve suggests that a competitor would react asymmetrically to price increases and price decreases by the firm. Apr 30,  · The following are the features of a recession: Slump, bankruptcy, bust, collapse, decline, depression, downturn, inflation, slide and stagnation.

It is the act of withdrawing or going back, an extended decline in general business activity, economy decline, decline in GDP like you said and also decline in Resolved. The economic recession of the late s has been called the greatest economic downturn our country has faced since the Great Depression.

American businesses and banks are failing, foreclosures are spreading like wildfire, and unemployment numbers have reached double digits.

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