Translate Page To German Tranlate Page To Spanish Translate Page To French Translate Page To Italian Translate Page To Japanese Translate Page To Korean Translate Page To Portuguese Translate Page To Chinese
  Number Times Read : 753    Word Count: 2008  
Categories

Arts & Entertainment
Business
Career
Cars and Trucks
Celebrities
Communications
Computers
Culture and Society
Disease & Illness
Environment
Fashion
Finance
Food & Beverage
Health & Fitness
Hobbies
Home & Family
Inspirational
Internet Business
Legal
Online Shopping
Pets & Animals
Politics
Product Reviews
Recreation & Sports
Reference & Education
Religion
Self Improvement
Travel & Leisure
Vehicles
Womens Issues
Writing & Speaking
 


   

What Are The Causes of Economic Recession



[Valid RSS feed]  Category Rss Feed - http://articlespromoter.com/rss.php?rss=257
By : Paul Hata    99 or more times read
Submitted 0000-00-00 00:00:00
An economic situation in which a country's gross domestic product or output is sustaining a negative growth for at least two consecutive quarters or six months is called an economic recession. For the National Bureau of Economic Research (NBER), recession is a significant decline in economic activity lasting more than a few months.

Economic recession lasts for eleven months and may reach until two years. While a recession that is short lived is called economic correction. Meanwhile a sustained recession turns into a depression.

What causes recessions to happen?

There are complex reasons as well as simple reasons why economic recessions happen. John Maynard Keynes states that there are animal spirits as driving elements for a recession. Animal spirits could be confidence, uncertainty, and pessimism. These animal spirits prevent objectivity and quantitative analysis.

An example where these animal spirits take over, is when consumers lose interest on products and outputs. On the eve of an economic recession, there will be overproduction. Supply will exceed the demands of products and goods.

This will push companies to increase prices and consumers will lose confidence and will be uncertain in purchasing products. Until the event that consumers will stop buying. Another example for this element driving recession will be the psychological impact the events of the September 11 attacks on consumers and the people.

Some economists suggest that recession may not only be caused by events that have large or huge impact on the people. Events that hurt particular companies or industries can also cause recession. Major innovations or change in a price of a major component needed in the completion of the product can have dramatic effects on some firms. These may cause reduction of workers or production.

Overconsumption can also be a cause of recession. Spending more that what is necessary may lead to recession and poverty. And example will be the major fuss over the expenditure of the United States in the Iraq war. Economists are saying that the United States should be careful with their consumption in the future.

Government economic policies can be used to avoid economic recession. But failure to provide good economic policies can lead to recession. There are some errors that can be made in economic policies. There are some economic policies that can lead to a boom and bust. This means that the economy is running in an unsustainable pace. Inflation is increasing.

Another policy error is that the policymakers themselves are not attentive enough to see the increasing inflation and onset of recession. Policymakers often times regard the onset of recession as just a slow economic growth and will correct themselves. But failure to address this may lead to more economic disasters.

Economic recession is not just a United States issue. The United Nations expressed an alarm that there might be a global economic recession as early as January 2008. According to United Nations, world economic growth for 2008 is estimated to be on 3.4 percent, flowing from the down trend since 2006 (3.9 percent) and 2007 (3.7 percent).

The bursting of the housing market bubble of the United States and the unfolding credit crisis of other countries are some contributing factors for a global recession. Currently, Latvia, Estonia and Lithuania are in risk of experiencing economic recession due to credit crisis.

To summarize, economic recession can be brought about by external as well as internal economic shocks and widening imbalances in the economy. Numerous ways can cause recession. Steps can be undertaken to avoid altogether this kind of economic scenario to happen. But the most difficult part is to recover from the impacts of this economic turmoil.
Author Resource:- What Are The Causes of Economic Recession -
City Planets,
One Planets,
Shopping Planetsand
Business Planets
Article From Articles Promoter Article Directory

HTML Ready Article. Click on the "Copy" button to copy into your clipboard.




Firefox users please select/copy/paste as usual
New Members
select
Sign up
select
learn more
Affiliate Sign in
Affiliate Sign In
 
Nav Menu
Home
Login
Submit Articles
Submission Guidelines
Top Articles
Link Directory
About Us
Contact Us
Privacy Policy
RSS Feeds

Actions
Print This Article
Add To Favorites

 

Free Article Submission

Website Security Test