By: Katie Costa
American International University
The essay I will be writing about is the cause and effect of a recession. There have been many recessions around the world. I will be writing about what a recession is and what happens to cause them. I will also be writing about what the effects and aftermath of a recession are. A recession is an economic failure.
We live each day to work and make money. The money we make we use to buy products, which in turn keeps the economy going strong. When there is a stop in the flow of money, the economy fails. A failing economy is a rising recession. If we can’t continue the flow of money, we can’t grow economically.
“Due to increased unemployment, multiple bankruptcies, the failing stock market, and a lack of public confidence The National Bureau Of Economic Research declared a recession on November 26, 2001.”(Wall Street Words, 2003). These are all examples of the causes of a recession. People were not making enough money which led to less purchasing. The less we purchase the worse the economy gets. In the article “Recession” (2003) it is stated: “The National Bureau of Economic Research formally defines a recession as three consecutive quarters of falling real gross domestic product.”
“A recession’s manifestations are rising unemployment, contracting business activity, and decreasing purchasing power of consumers.”(Philip’s Encyclopedia 2008) If we do not understand what a recession is and do not notice it early on, it can lead to a depression. “If a recession is not checked it can lead to a depression.”(Philip’s Encyclopedia 2008) The cause of a recession is also the effect of a recession. A recession starts by the decrease in money flow. This causes people to stop purchasing as much.
“Unfortunately, there is no consensus definition and measure of recession. In general, it means that the economy is shrinking in size...