Today more than ever, there is a major and constant fear of an impending recession in our government’s economy. A recession is a downturn in the economy when output and employment are falling for at least a period of six months. (Krugman and Wells, 2006) This is due to a number of factors: people buying less, a decrease in factory production, growing unemployment, a slump in personal income, or an unhealthy stock market. (Harris, 2002) These factors including scarcity, choice, and opportunity cost are the reasons that an economy is considered in a recession and how something like this happens. One main impact on what happens in and to the economy is the factor of choice. The economy cannot work on its own; it needs the consumers to drive it based on their wants. The producers and consumers are the driving force of the economy. This is where resources come into play. Resources are anything that can be used to produce something else such as land, labor, physical capital, and human capital. (Krugman and Wells, 2006) These resources are what allow producers to create products, and for consumers to purchase and use what is produced. Supply and demand also play a part in the producer/consumer relationship. Producers’ outputs and prices are based on the willingness of the consumers to purchase the products. However, what happens if the resources all of a sudden become scarce and there is a shortage? How does this affect the state of the economy? Firstly, if certain resources become scarce, the price of the remaining supply will go up. In order to try to recoup losses, the prices of resources that the producers have to purchase to create products will increase. This in essence will throw off the entire flow and stability of the economic system. Scarcity causes trade-offs which then lead to an opportunity cost, or what is given up. Due to the scarcity of products, producers must pay more to get the material they need, which forces them in turn to raise the prices that the consumers must pay, which leads to the next point: individual choice. Secondly, as stated before, the economy runs by the decisions that the consumer makes: choices, whether it is to buy or not to buy. The choice to perform a certain action includes the choice of not performing a certain action. (Krugman and Wells, 2006) For example, the choice to buy a burger from Burger King includes the choice of not buying a burger from McDonalds.
All societies today are faced with the economic problem of relative scarcity. Relative scarcity rises from the fact that all our wants and needs cannot be completely satisfied as we have a limited amount of resources. Australia, which is predominately a market economy, is faced with this particular economic problem of relative scarcity, which results in facing the three choices of what to produce, how to produce and for whom to produce.
This paper aims to discuss the Short-Term and Long-Term Impacts of the Great Recession and
These conditions have the ability to cause recession. Now that an armistice has been reached in Korea, a recession is beginning to occur (Pach and Richardson, 54). I believe that the President’s chief concern should not be to make an immediate and fast acting restoration of the general economy. The problems of the federal deficit and the recession must wait until the more important problems are dealt with. The problem at hand is the rising rate of unemployment.
"The Great Recession." State of Working America. Economic Policy Institute, n.d. Web. 24 Apr. 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.
...s to raw materials. For example, a person might want to be a farmer. In order to do this in the original state of nature, he would need to acquire land, animals, and materials to build his farm. He would then only be able to produce as much as he could use and as would not infringe upon the ability to produce or acquire necessary property by others. However, with the introduction of money, even if he could not buy the land for his own farm, he could seek other economic endeavors that would be just as personally beneficial. Instead of owning his own small farm, he could work in a grocery store and obtain the same amount of relative personal property via his earned wages, and these could be used to purchase all of his necessities. Higher levels of industry encouraged by the use of money reduce the risk that individuals cannot meet the opportunities they are seeking,
Between January 2008 and February 2010, employment fell by 8.8 million, the largest decline in American history. The 2008 Recession, which officially lasted from December 2007 to June 2009, began with the bursting of an 8 trillion dollar housing bubble. Job losses during the recession meant that family incomes dropped, poverty rose, and people all over the country were suffering. Things like this don’t just happen. Policy changes incorporated with the economy are often a major factor. In this case, all roads lead to one major problem: Deregulation. Deregulation originating from the Carter and Regan Administrations, combined with a decrease in consumer spending, and the subprime mortgage bubble all led up to the major recession of 2008.
Economic events are largely governed by the interaction of supply and demand. The law of supply states that with ‘all else being equal’ (ceteris paribus), as market price of a good or service increases/decreases so will an increase/decrease in quantity supplied. In turn, the law of demand states as market price of a good or service increases/decreases ceteris paribus, the quantity demanded will increase/decrease accordingly. The Australian avocado industry is an indicative example of microeconomics - the study of individual consumer or business decision making and spending behaviour in relation to the allocation of a limited resource and the correlation of supply and demand in determining
... the consumer was demanding. With over production the consumer don’t purchase the items that was once in demand and Farmers over produce their products and those products are lowered once it hits the local super market.
...ults of the recession. In order for this never to happen again, there is a need to learn from the mistakes in the past and to look for the warning signs. The problem is not just restricted to one country, but is a global problem and needs to be addressed as such.
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).
The President in office at the start of the recession was Herbert Hoover. As the beginning signs of the recession started to show through, Hoover was very sure that the hardships would subside. Hoover told the nation that they had, “…passed the worst,” and as it was written by Stephen Feinstein, Hoover believed that, “The economy would sort itself out.” He was proved to be very wrong. Once President Hoover realized that the economy would only get worse, he began coming up with ideas to repair the nation. Hoover was afraid that the government would butcher his ideas, therefore, he presented the nation with less helpful solutions. The President’s solutions in...
The Economy is the backbone to society. There are many factors that operate in, and govern our society’s economical structure. Factors such as scarcity and choice, opportunity cost, marginal analysis, microeconomics, macroeconomics, factors of production, production possibilities, law of increasing opportunity cost, economic systems, circular flow model, money, and economic costs and profits all contribute to what is known as the economy. These properties as well as a few others, work together to influence the economy. Microeconomics and Macroeconomics are two major components. Both of these are broken down into several different components that dictate societal norms and views.
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.
The market price of a good is determined by both the supply and demand for it. In the world today supply and demand is perhaps one of the most fundamental principles that exists for economics and the backbone of a market economy. Supply is represented by how much the market can offer. The quantity supplied refers to the amount of a certain good that producers are willing to supply for a certain demand price. What determines this interconnection is how much of a good or service is supplied to the market or otherwise known as the supply relationship or supply schedule which is graphically represented by the supply curve. In demand the schedule is depicted graphically as the demand curve which represents the amount of goods that buyers are willing and able to purchase at various prices, assuming all other non-price factors remain the same. The demand curve is almost always represented as downwards-sloping, meaning that as price decreases, consumers will buy more of the good. Just as the supply curves reflect marginal cost curves, demand curves can be described as marginal utility curves. The main determinants of individual demand are the price of the good, level of income, personal tastes, the population, government policies, the price of substitute goods, and the price of complementary goods.