Responses For Recessions And Stimulate Economy Essay

974 Words Jul 24th, 2015 4 Pages
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 of Macroeconomics, the unemployment rate is “the most widely used indicators of conditions in the labor market”. The unemployment rate is an important signal of recessions. Meanwhile, it is also a main impact effect of recession in the economy market. It shows how is the situation in the labor market by the influences of recessions. During a recession, unemployment rate rises strongly and finally falls in periods of expansion. 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…

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