Society often takes for granted the luxuries that we consume in America. A thriving economy with an open market that allows for individuals to obtain the necessary goods and services we desire. However, the economy is not always perfect. Society cringes at the thought of entering into a recession. The thought of businesses crumbling and sending some into poverty is a scary topic for the general public to acknowledge. Guiding the economy into a period of instability with the fear of never coming out creates concern for many Americans.
A recession is a significant decline in economic activity within the economy for over two consecutive quarters lasting between six to eighteen months. Also, a recession can be defined as when the economy begins …show more content…
There are many parallels found within the Great Recession and the Great Depression. The two recessions are the fallout of the same economic phenomenon with a few minor differences. Both recessions experienced a rise of prices followed by tremendous pressure from deflation that sent the economy of both into debt. The Great Depression was a cause of too many consumers borrowing irresponsibly and the Great Recession was due to too many banks lending irresponsibly. Overall the economic decline was larger during the Great Depression with a -26.5% decline compared to the Great Recession’s decline of -3.3%. The Great Depression triggered a much deeper drop in GDP and employment rates in the U.S. Although the drop may have been bigger doesn’t mean that it was overall worse. The U.S. was able to learn from the mistakes and create economic policies to help prevent these recessions from happening …show more content…
Because of the Great Depression, policymakers are able to understand the causes and results from the recession and make knowledgeable policy changes in our economy today. Our economy is more adaptable to change as a result of the policies that were enacted from the Great Depression. Although history tends to repeat itself, these policy changes were established to prevent another Great Depression. In order to avoid another recession in the future the government must establish the causes of the recession and policies that were used. Policies recommendations that could be used to prevent another recession would include cutting interest rates, expanding fiscal policy, and preventing home repossessions. Lowering the interest rate could help boost aggregate demand within the economy, giving consumers more disposable income. This would encourage consumers to spend more rather than save. By cutting the interest rates, this would also allow for consumers to have lower interest rates on their loans and mortgage interest payments. Preventing home repossessions is an important policy recommendation for the prevention of a recession because that was a major problem within the Great Recession. Home repossessions cause losses for banks and decreases in consumer spending. With lower interest rates, consumers
A recession is a significant decline in economic activity within the economy for over two consecutive quarters lasting between six to eighteen months. Also, a recession can be defined as when the economy begins …show more content…
There are many parallels found within the Great Recession and the Great Depression. The two recessions are the fallout of the same economic phenomenon with a few minor differences. Both recessions experienced a rise of prices followed by tremendous pressure from deflation that sent the economy of both into debt. The Great Depression was a cause of too many consumers borrowing irresponsibly and the Great Recession was due to too many banks lending irresponsibly. Overall the economic decline was larger during the Great Depression with a -26.5% decline compared to the Great Recession’s decline of -3.3%. The Great Depression triggered a much deeper drop in GDP and employment rates in the U.S. Although the drop may have been bigger doesn’t mean that it was overall worse. The U.S. was able to learn from the mistakes and create economic policies to help prevent these recessions from happening …show more content…
Because of the Great Depression, policymakers are able to understand the causes and results from the recession and make knowledgeable policy changes in our economy today. Our economy is more adaptable to change as a result of the policies that were enacted from the Great Depression. Although history tends to repeat itself, these policy changes were established to prevent another Great Depression. In order to avoid another recession in the future the government must establish the causes of the recession and policies that were used. Policies recommendations that could be used to prevent another recession would include cutting interest rates, expanding fiscal policy, and preventing home repossessions. Lowering the interest rate could help boost aggregate demand within the economy, giving consumers more disposable income. This would encourage consumers to spend more rather than save. By cutting the interest rates, this would also allow for consumers to have lower interest rates on their loans and mortgage interest payments. Preventing home repossessions is an important policy recommendation for the prevention of a recession because that was a major problem within the Great Recession. Home repossessions cause losses for banks and decreases in consumer spending. With lower interest rates, consumers