Tuesday, October 27, 2015

What Economic Recession is all About (part 1 of 2)


Economic recession is gripping the United States right now and people just don't know what to do about it. In truth, economic recession isn’t something new anymore. In fact, it has been happening all through out the decades. People don't just know about it because it has not been as widely publicized as now. This is perhaps because of the ongoing political race between the Republican and the Democrat. And mayhap also because, the country has never experienced such downturn in economy than now, with losses in the real estate, banking and insurance sectors.

Economic recession is actually a term used to refer to the slowing down or downturn of the economy after a period of upturn. You can better picture it with a cycle that often turns. Economy is sometimes rosy and bullish but after a period of progress, it will slow down and become bearish as what they use in the stock market.

The cycle of economy

Often, economic recession is not a problem as the government's financial sectors have solutions for it. One of the most common is tax cuts where the government gives up a portion of their income and gives it back to the people so that they will have money to buy goods. When consumerism becomes good again, companies who lost a lot of money during the period of downturn and low demand will regain their losses. This will lead to the hiring of new people and increasing their production. More supply in the market will lead to lower prices which will hopefully encourage higher demand for products. Thus, ending the recession.

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