Responses for Recessions and Stimulate Economy
A recession is an economic contraction phenomenon in the economic market and is a significant part in the business cycle. The business cycle is the changes between recessions and expansion (Macroeconomics, chapter 6, P.171).
Generally, a recession is the economic decline in a period; especially, macroeconomic landmarks of a recession are the decline in GDP and an increase in unemployment. According to Macroeconomics, a recession is a time of more than six connected months during which the overall yield of the economy contracted. As a result, GDP decreases in recessions due to shrinkage of output. The unemployment rate is a distinct sign to show a recession appeared. According to the chapter 6 …show more content…
For example, in 2008 in the U.S., increasing unemployment rate showed a new recession began, and this recession was identified by the NBER in December 2007(Macroeconomics, chapter 6, P.172). Therefore, the unemployment rate is fluctuant during recessions. On the other hand, the natural unemployment is the sum of frictional unemployment and structural unemployment. Government policies can influence the natural unemployment and alter over time. During a recession, diverse natural unemployment appeared in different periods based on levels of decline (Macroeconomics, chapter 6, P.226). Recessions are miserable experiences in the economy. They bring some big problems of pain. For instance, the high unemployment rate is a main and obvious impact of recessions because of scarcity of jobs, so people are hard to find jobs; cutting the standard of living of families is a significant problem for overall residents. Meanwhile, more people lose their houses because they do not have enough money to afford their houses. At that time, more people living below the poverty line, so recessions enhance the poverty rate (Macroeconomics, chapter 6, P.171-172). During a recession, …show more content…
Roosevelt became a new president at that time. When he saw the paralyzed situation of the American economy, he said, “The only thing we have to fear is fear itself.” As a result, he took some actions immediately to stimulate the economy, which was so-called “New Deal”. He reformed the laws of banks and stimulated their energy as soon as possible, and he started to talk to residents directly on public radios. He tried to rebuild the public confidence for the economy. In addition, the government passed legislations, which proposed to stabilized economic production. At the same time, the government created many jobs to help unemployed people. For example, the Tennessee Valley Authority (TVA) that built dams to control flooding was an effective chance to solve the huge unemployment. Since 1935 to 1943, 8.5 million people were employed by the Works Project Administration (WPA). Even though labor policy of the New Deal made more people get jobs and decreased the unemployment rate, it extended the recovery from depression. The minimum wages were encouraged by the National Recovery Administration, so employees could not get their salaries from bosses in the delicate situation of the economy. As a result, in the late 1930s, unemployment increased again obviously. Therefore, people started to realize that the labor activities by Roosevelt could not recover the American economy truly. If the government stopped supporting programs, the chances of jobs would vanish
A recession is an economic contraction phenomenon in the economic market and is a significant part in the business cycle. The business cycle is the changes between recessions and expansion (Macroeconomics, chapter 6, P.171).
Generally, a recession is the economic decline in a period; especially, macroeconomic landmarks of a recession are the decline in GDP and an increase in unemployment. According to Macroeconomics, a recession is a time of more than six connected months during which the overall yield of the economy contracted. As a result, GDP decreases in recessions due to shrinkage of output. The unemployment rate is a distinct sign to show a recession appeared. According to the chapter 6 …show more content…
For example, in 2008 in the U.S., increasing unemployment rate showed a new recession began, and this recession was identified by the NBER in December 2007(Macroeconomics, chapter 6, P.172). Therefore, the unemployment rate is fluctuant during recessions. On the other hand, the natural unemployment is the sum of frictional unemployment and structural unemployment. Government policies can influence the natural unemployment and alter over time. During a recession, diverse natural unemployment appeared in different periods based on levels of decline (Macroeconomics, chapter 6, P.226). Recessions are miserable experiences in the economy. They bring some big problems of pain. For instance, the high unemployment rate is a main and obvious impact of recessions because of scarcity of jobs, so people are hard to find jobs; cutting the standard of living of families is a significant problem for overall residents. Meanwhile, more people lose their houses because they do not have enough money to afford their houses. At that time, more people living below the poverty line, so recessions enhance the poverty rate (Macroeconomics, chapter 6, P.171-172). During a recession, …show more content…
Roosevelt became a new president at that time. When he saw the paralyzed situation of the American economy, he said, “The only thing we have to fear is fear itself.” As a result, he took some actions immediately to stimulate the economy, which was so-called “New Deal”. He reformed the laws of banks and stimulated their energy as soon as possible, and he started to talk to residents directly on public radios. He tried to rebuild the public confidence for the economy. In addition, the government passed legislations, which proposed to stabilized economic production. At the same time, the government created many jobs to help unemployed people. For example, the Tennessee Valley Authority (TVA) that built dams to control flooding was an effective chance to solve the huge unemployment. Since 1935 to 1943, 8.5 million people were employed by the Works Project Administration (WPA). Even though labor policy of the New Deal made more people get jobs and decreased the unemployment rate, it extended the recovery from depression. The minimum wages were encouraged by the National Recovery Administration, so employees could not get their salaries from bosses in the delicate situation of the economy. As a result, in the late 1930s, unemployment increased again obviously. Therefore, people started to realize that the labor activities by Roosevelt could not recover the American economy truly. If the government stopped supporting programs, the chances of jobs would vanish