Resession and Depression
Is the result of the current economic situation a recession or a depression?
In the economical aspect, depressions and recessions have a lot of similarities. Almost all the people heard about depressions and recessions in the economy since decade ago. However, not everyone can precisely distinguish the definition between depressions and recessions in the economy. The issue worth mentioning is that whether economic recessions or economic depression, all represent the same meaning. The reason why some people change the word is to avoid the populace notice or worry about the real worst economic situation. Nonetheless, these two economic situations have something delicately difference.
Economic recession is a serious decline, which can maintain almost a few months. In other words, some companies or industries will decrease the productivity; staff members and workers will be unemployed, otherwise, their real incomes will below the basic wages during the recession. Besides, people 's consumption trend will decreased because of the unemployment rate raising. Finally, it also can decrease Gross Domestic Product by this vulnerable economic situation because of the employment rate raise.
"In many ways recessions are an interesting 'natural experiment ' to monitor: they involve a major contraction in demand sustained over a substantial period of time, they affect some firms far more than others and they are exogenous to the actions of individual firms (although not necessarily to the actions of all firms taken together). That the contraction in demand is major and sustained means that those firms who are badly affected by a recession are likely to be forced to rethink the fundamental premises of their competitive strategy, and cannot simply initiate holding actions to wait out the storm."(Geroski P.A. et. al., 1997: 2) According to Geroski 's thinking, recession as a business cycle will have severely damage to the firm, even might be result in bankruptcy.
The
In the economical aspect, depressions and recessions have a lot of similarities. Almost all the people heard about depressions and recessions in the economy since decade ago. However, not everyone can precisely distinguish the definition between depressions and recessions in the economy. The issue worth mentioning is that whether economic recessions or economic depression, all represent the same meaning. The reason why some people change the word is to avoid the populace notice or worry about the real worst economic situation. Nonetheless, these two economic situations have something delicately difference.
Economic recession is a serious decline, which can maintain almost a few months. In other words, some companies or industries will decrease the productivity; staff members and workers will be unemployed, otherwise, their real incomes will below the basic wages during the recession. Besides, people 's consumption trend will decreased because of the unemployment rate raising. Finally, it also can decrease Gross Domestic Product by this vulnerable economic situation because of the employment rate raise.
"In many ways recessions are an interesting 'natural experiment ' to monitor: they involve a major contraction in demand sustained over a substantial period of time, they affect some firms far more than others and they are exogenous to the actions of individual firms (although not necessarily to the actions of all firms taken together). That the contraction in demand is major and sustained means that those firms who are badly affected by a recession are likely to be forced to rethink the fundamental premises of their competitive strategy, and cannot simply initiate holding actions to wait out the storm."(Geroski P.A. et. al., 1997: 2) According to Geroski 's thinking, recession as a business cycle will have severely damage to the firm, even might be result in bankruptcy.
The
References: 1. Anonymous (28/04/2012) Journal of The Economist, published in London, published by the economist’s editorial office in London. (date to read, 27/07/2012) 2. A. Radford; Professor H. J. Jones (chairman) et. al. (1935) Britain in Depression, published in the United Kingdom, published by SIR ISAAC PITMAN & SONS, LTD. London. (date to read, 08/01/2012) 3. Anonymous (2012) YouDictionary website URL: http://reference.yourdictionary.com/word-definitions/Definition-of-Economic Depression/html (date to access, 27/07/2012) 4. Mike Moffatt (2012) About.com, a part of The New York Times Company URL: http://economics.about.com/cs/businesscycles/a/depressions.htm (date to access, 07/30/2012) 5. P. A. Geroski and P. Gregg (1997) Coping with recession, published in the United Kingdom, published by The press syndicate of the University of Cambridge.(date to read, 26/07/2012)