Tuesday, April 30, 2013
picture taken from (http://poetsandquants.com/wp-content/uploads/2013/02/recession.jpg)
In our current place in time the term recession is very important because that is what the United States has been going through for years. The term recession in economics is a general slowing down of economic activity. Indicators like GDP, employment, and investment spending fall while unemployment rises. There are many factors that can lead to a recession but the major cause of a recession is inflation. While there is high inflation and the percentage of goods and services that you can buy with the same amount of money decreases people cut the amount that they spend leisurely.This reduces overall spending as people begin to save more as inflation increases, however as individuals and businesses need to reduce their spending to avoid the higher costs GDP (gross domestic production) will decline. Unemployment will increase due to companies trying to lower their costs. The fall of GDP and the rise and unemployment are factors that cause an economy to go into a recession.