ecnomic recession

Topics: Recession, Inflation, Monetary policy Pages: 2 (860 words) Published: October 18, 2014
 A recession is a general downturn in any economy. A recession is associated with high unemployment, slowing gross domestic product, and high inflation

Economic Recession Definition:
Economic recession is a period of general economic decline and is typically accompanied by a drop in the stock market, an increase in unemployment, and a decline in the housing market. Generally, a recession is less severe than a depression. The blame for a recession generally falls on the federal leadership, often either the President himself, the head of the Federal Reserve, or the entire administration.

Factors That Cause Recessions:
High Interest Rate: High interest rates are a cause of recession because it limits liquidity, or the amount of money available to invest. Increased Inflation: Inflation refers to a general rise in the prices of goods and services over a period. As inflation increases, the percentage of goods and services that can be purchased with the same amount of money decreases. Reduced Consumer Confidence: If consumers believe the economy is bad, they are less likely to spend money. Consumer confidence is psychological but can have a real impact on any economy. Reduced Real Wages: Real wages refers to wages that have been adjusted for inflation. Falling real wages means that a worker's paycheck is not keeping up with inflation. The worker might be making the same amount of money but his purchasing power has been reduced The financial crisis of 2007–2008, also known as the Global Financial Crisis and 2008 financial crisis, is considered by many economists to have been the worst financial crisis since the Great Depression of the 1930s.[1] It resulted in the threat of total collapse of large financial institutions, the bailout of banks by national governments, and downturns in stock markets around the world. In many areas, the housing market also suffered, resulting...
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