The recession of 1973 through 1975, was due to the Organization of Petroleum Exporting Countries (OPEC) who rose gas prices and imposed an embargo against the United States. This quickly caused oil production to be cut dramatically, leaving no choice but to increase the price in oil. This recession, I am going to pin point the causes, fiscal and monetary policy the government uses to help the economy slowly come out from the recession. Also I am going to pin point the recession’s recovery and expansion.
The causes of this recession was due to the unemployment being too high and how it had rose even higher through the years. The unemployment rate was at 4.9% by the fourth quarter and rose significantly at 8.3% by the fourth quarter of 1975. This recession was quite severe since World War II. There has to be a cause of why the unemployment rate was continuing to rise and the reason for this recession, was the decline in the investment purchases. The GDP continued to fall because of the decline in investment.
This model shows the decrease in investment purchases, decreased the aggregate demand, showing the GDP to also decrease as well. “The decreases in investment purchases was in all components of investment spending; producer equipment, producers structures, residential structures and the changes in business inventories.” (The U.S. Recession of 1973-75).The oil price increases from the OPEC, causing a decrease shift to the aggregate supply because oil is a component on the supply side. Below is an AD/AS model to show the shift in aggregate supply from the cause of increase in the oil price. This graph shows by the change in aggregate supply, it caused an increase in price level and a decrease in GDP.
Cutting back on inves...
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..., the economists can now go off of knowing when home prices are down, banks tightening lending standards, and a “debt retrenchment” underway, they know the recovery could have a chance of taking a long time.
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The July 1990- march 1991 recession lasted eight months and was caused by many different adverse financial problems on the environment in the early 90’s. Most post was recessions are short as this one was. They tended to last only up to eleven months at a time. On October of 1987 Black Monday occurred which caused the stock market to crash. The Persian war joined with the rising infiltration rates created this recession. When the recession began the Fed began to try to reduce infiltration, which then limited economic expansion.(Kevin Mulligan Recessions) Extreme changes in the GDP growth began to emerge at the beginning of 1990’s, however the overall growth seemed to remain positive. As a result of this recession a loss of consumer and business confidence was lost due to rising of oil prices along with an already weak economy.
In the years prior to the Reagan administration the United States experienced a suffering economy. For around 10 years stagflation had grown rampant. Stagflation is the combination of a stagnant economy due to rising unemployment coupled with increasing inflation. Before stagflation, the United States experienced a time of great prosperity from World War 2 until the 1960s. The reason for this prosperous time was based on the huge production of war materials created by World War 2. The United States sailed on the back of this industry until it died by the late 60s to early 70s (Source 1 // Shmoop Editorial Team). In 1960, the United States was officially in a recession, and by 1970 it had become much more serious. The industry from World War 2 had died, stagflation was on the rise, and the administrations of the time were not helping.
There was a recession with high interest rates and high inflation, beginning literally as soon as the war came to an end. Nixon urged there to be wage and price control to try to stop it from occuring, but it didn't work. Gerald Ford (his successor) spent a lot of his time talking about this, but didn't do much. The next president, Jimmy Carter, is still blamed for it still to this day, but he derived the problem from two previous presidents.
The American economy seemed to get worse by the end of 1981 and economists throughout the country were getting more and more concerned about it. ...
Waggoner, John. "Is Today's Economic Crisis Another Great Depression?" USA Today. N.p., 4 Nov. 2008. Web. 7 Mar. 2014.
Every few years, countries experience an economic decline which is commonly referred to as a recession. In recent years the U.S. has been faced with overcoming the most devastating global economic hardships since the Great Depression. This period “a period of declining GDP, accompanied by lower real income and higher unemployment” has been referred to as the Great Recession (McConnell, 2012 p.G-30). This paper will cover the issues which led to the recession, discuss the strategies taken by the Government and Federal Reserve to alleviate the crisis, and look at the future outlook of the U.S. economy. By examining the nation’s economic struggles during this time period (2007-2009), it will conclude that the current macroeconomic situation deals with unemployment, which is a direct result of the recession.
During the 70?s the world entered a recession because ?the cost of economic growth of other industrialized nations began to rise rapidly?, the United States felt the effect. (AMSA, 2004, ¶ 14). With the development of other nations, came lose of industrial production for the United States of America. American Medical Student Association (2004) stated ?In 1950 we had 60% and by 1980 we only claimed 30% of the world production?, this brought higher prices as well as loses of jobs.
Not only did Carter and Reagan Administrations help cause the Recession, President Clinton helped. “Clinton then established official government poli...
What caused the Great Recession that lasted from December 2007 to June 2009 in the United States? The United States a country with abundance of resources from jobs, education, money and power went from one day of economic balance to the next suffering major dimensions crisis. According to the Economic Policy Institute, it all began in 2007 from the credit crisis, which resulted in an 8 trillion dollar housing bubble (n.d.). This said by Economist analysts to attributed to the collapse in the United States. Even today, strong debates continue over major issues caused by the Great Recession in part over the accommodative federal monetary and fiscal policy (Economic Policy Institute, 2013). The Great Recession of 2007 – 2009 enlarges the longest financial crisis since the Great Depression of 1929 – 1932 that damaged the economy.
In economics, a recession occurs when there is a slowdown in the spending of goods and services in the market. A recession causes a drop in employment, GDP growth, investment, as well as societal well-being. All recessions are caused by a specific cause, but the Great Recession of 2007-2009 was caused by a crash in the housing market. This crash was triggered by a steep decline in housing prices. All of a sudden, people bought houses because there was an excessive amount of money in the economy and they thought the price of houses would only increase. (Amadeo, 2012). There was a financial frenzy as the growing desire for homes expanded. People held a lot of faith in the economy and began spending irrationally on houses that they couldn’t afford. This led to overvalued estate and unsustainable mortgage debt. (McConnell, Brue, Flynn, 2012).
In conclusion, regardless of Macropoland’s current economic condition, it is fair to say that it is all part of the business cycle. The business cycle has three parts: peak, trough, and peak. The peak is the date that the recession starts. In Macropoland’s case, the peak would be at the beginning of 1973, its trough somewhere between 1973 and 1974, and then its peak again at 1974. In the second scenario, Macropoland is either at its trough, where it is about to head up again because of its low inflation rate, or it is at its expansion, on its way to heading to its next peak.
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Many countries in the world have been suffering a recession in their economies and UK has not been an exception. A recession is a macroeconomic term describing one of the two business cycles that economies go through. The business cycles is characterized by either a boom where there are more business activities carried with a rapid economic growth and points of recession where there is retardation min economic growth. Various aspects and factors contribute to economic growth, which is measured through GDP. This factor may include savings, investments government spending plus other factors within either an increase or a decrease. Reduction in spending may lead to a recession while a n increase in spending may lead to expansion that is a boom in the economy.