Recession and Depression | Economics Assignment

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Added on 2020-04-07

Recession and Depression | Economics Assignment

Added on 2020-04-07

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Business 1BUSINESSNameThe Name of the Class Professor The Name of the School The City and State where it is located

Recession and Depression | Economics Assignment_1

Business 2Business Question 1 Recession and Depression A recession is a term in economics which refers to the decline in the economy that lasts for at least six months or two-quarters of an economic period. On the other hand, a depression relates to a more severe case where an economic decline lasts for some years. Therefore, the difference in the number of years in occurrence determines the difference between the two terms.For instance, there have been only 33 recession periods since 1854 while only one depression hasoccurred since then1. The difference in severity thus quantifies the definition. During a recession, there is a contrast for at least two quarters in the gross domestic product characterized by a decrease in the growth of GDP which might in worse cases turn into anegative. The unemployment rate rises as the government borrowing increase to cater for the crisis in place. On the other hand, depression is characterized by an elongated recession where the speed of unemployment goes to 25 percent triggering housing prices. At the time, companies experience loses and lay off workers in a bid to cut down on the operating costs. Question 2The Global Credit CrunchThe United Kingdom was hit by the crisis which forced some small lender banks to close shop and be nationalized to cater for the debt as in the case of the Northern Rock, a low-risk secure building society. People in employment had to work harder and for longer hours to surpass their targets and achieve economic growth. However, contingent payments for overtime work were not given, and the non-performing workers were laid off, and the competition was stiff in the employment sector2. Further, the nation experienced a decrease in house sales and equally reduced spending in the retail sector. The case was a result of the unemployment rise owing to the reduction and closures of manufacturing and service industries hence the decline in the tax revenue. Businesses suffered as little, or no loans were being offered at the time due to less currency in the reserve banks owing to poor circulation and repayment rate of loans. Individuals were unable to pay their loans and houses and other securities auctioned to cushion the loss. Question 31Hansen, Per H. "Hall of mirrors: the great depression, the great recession, and the uses—and Misuses—of History."Business History Review89, no. 3 (2015): 557-569.2Brunnermeier, Markus K. "Deciphering the liquidity and credit crunch 2007–2008."The Journal of economic perspectives23, no. 1 (2009): 77-100

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