What is a recession?

January 30, 2013
What is a recession?

On television screens, words and terms are often heard whose concepts are unknown to many of our fellow citizens. For example, how many people know and can explain what a recession is?

In the free encyclopedia it is written that the term recession means a moderate decline in production or a slowdown in economic growth, which are not critical. At the same time, there is a lack of growth in GNP (gross national product) or its fall for a long time, at least six months.

In a more understandable sense, a recession means that the production output is reduced, which means a decrease in profits.

For the first time the term "recession" was used by American economists. This happened during the Great Depression, when agricultural productivity fell, activity in various industries and trade.

A recession usually leads to massive falls in stock market indices. A recession in the economy of one state is directly related to the economic situation of another.For example, a recession in the United States leads to a fall in economic activity in other countries.

Economists call signs of an incipient recession a sharp upsurge in rising energy prices and rising unemployment.

As an economic phenomenon, recession can be divided into three types:

  1. A recession arises from unplanned market shocks, for example, the outbreak of armed conflict. The main negative feature is the unpredictability of the current economic situation in the country and further results.
  2. The recession leads to a decrease in the level of trust among consumers or among businessmen and investors, and there is a distrust of political power in the country.
  3. A recession arises as a result of the loss of balance in the country's economy, the rapid growth of external debt and the fall in quotations.

This is the short answer to the question of what a recession is.

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