Readers Question: What does a Recession mean?
The definition of a recession is negative economic growth for two consecutive quarters. (see: definition of recession (definition of depression)
How does the recession impact:
1) Savings
In a recession, private sector savings tend to rise. This is because people become more nervous to spend. The spectre of unemployment encourages people to save more and spend less. However, the rise in private sector saving may be offset by a fall in public sector saving (i.e. government borrowing increases to try and stimulate the economy)
2) consumption
Consumption will tend to fall because people are worse off.
3) Investment
Investment will fall. Usually investment is highly cyclical. Therefore, a recession causes a bigger % fall in investment than consumption. Confidence is very important to investment so in a recession, investment tends to dry up.
4) goverment spending
Automatic fiscal stabilisers will cause government spending to rise. e.g. in recession, government have to spend more on unemployment benefits. Also the government may pursue expansionary fiscal policy to try and increase aggregate demand e.g. spending on infrastructure projects.
5) aggregate demand
Aggregate demand is falling in a recession
See also: Impact of recession
9 comments ↓
please tell me whats are the major vicious
impact of recession in Indian econimy from Jan 2009 to till now
i want to know the impact of recession on india plz send me information very soon on my id
i want to know the impact of recession on india plz send me information very soon on my id
the bigest hit by recession is unemployement,job loss,cost cutting and it will increase public expendeture,and private saving.
i want to know about the impact of recession on india….can u pl’s send me this valuable information on my id.
please tell me, is recession causes unemployment or unemployment causes recession
Mainly un-employed causes recession, impure and duplicacy in products is being sold out in market.
Please tell me..Recession is a controlabale factor or not?If controlable what are the factor .
impact of recession in Indian enterprise
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