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What is Economic Recession definition/concept

The reality economic is mutated and is subject to cycles of growth or decrease. Terms such as crisis, recession, slowdown or depression are often used as if they were equivalent, but in reality they are different concepts. Economic Recession

First, this idea understands that economic activity is not growing. This circumstance translates into a lack of job creation . At the same time, this means other things: companies with less capacity to sell their products, a state that collects less taxes, and society as a whole with fewer options to move forward or keep their jobs.

In macroeconomic terms, recession is the global decline in the set of economic activities in a country.

One way to measure this reality is through the real Gross Domestic Product over an extended period.

The main characteristic of any recession is the decrease in most economic variables: production of goods and services, public and private investments , in addition to falling inflation (when there is a decrease in demand for raw materials, product prices tend to decrease) . Economic Recession

Expansion is the opposite idea of ​​recession. Both circumstances are absolutely normal within market economy cycles.

The Last Great Recession in the World

When the US banking industry flooded the market with garbage packages, many of the investors who had purchased these products ended up going bankrupt. The first consequence was that banks stopped lending and there was a double reaction: a generalized shutdown of the economy and an increase in unemployment rates. Naturally, tax collections decreased and, in parallel, there was an increase in the external debt of the affected nations. Economic Recession

Do not confuse recession with crisis

When talking about crisis in the capitalist system, it is also necessary to give some basic references and definitions. Thus, there is an economic crisis when there is a significant break within a cycle. These periods have the following general characteristics:

1) lack of ability to save to maintain investments,

2) smaller offer of products that is usually accompanied by an increase in prices,

3) decreased banking capacity to offer loans,

4) economic bubbles in some sector,

5) situations of hyperinflation in contexts of social unrest and

6) general instability in the markets. Economic Recession

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