Chapter 13, Problem 17AA

To determine

To evaluate: the effects during the entering phase of recession on the economy.

Explanation of Solution

The variation in the nation’s activity is described in terms of boom or recession times these are regarded as business cycles. The economy, measured by indicators such as employment, output and sales, is rising during expansion — in real terms, after removing inflationary effects.

A recession is a time when there is a decline or decrease in the economic activity. The companies see less demand for the product and start losing revenue. Companies begin lay off workers to reduce its cost and reduce the losses. Recessions lead to higher unemployment (unemployment refers to the situation when a person is willing to do job but he is not finding job), lower wages and salaries and more generally to the lack of opportunities. Education, private capital spending, and economic development are all likely to suffer in the current downturn and the consequences having affected for be longer period.

Economics Concept Introduction

Introduction: Recession is regarded as a major decrease in country’s activity spread through the economy, and can also be seen over a few months in real gross domestic product (GDP), real wages, jobs, manufacturing, and wholesale retail sales.