Business Lessons: Topic 1: Recessions |
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| Author:
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| Submitted: |
14-Jan-2003 09:48:24 |
| Imported From: |
zZine (original author: davezbitch)
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| Have you ever wondered what those Wall Street people were talking about? Ever unsure about what they are saying on CNN? If so, this article is for you.
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Well, lets take a short statement, which is currently true, and analyze it:
The current US economy, is in a recession, there is heightened unemployment, and it is still spiralling downward. Hopefully, the US Economy Stimulus Package, created by George Bush will be successful in stopping this recession.
What is an economy?
Well, an economy is based on the GDP, or Gross Domestic Product. The GDP is the value of the goods and services produced in a country. This figure will give an idea of the economy of a country. A large economy will have a high GDP per capita. The economy changes as companies change. If a large company such as Enron has trouble, the whole countries Economy will go down, and things that have an impact, such as possible war, or terrorist attacks have strong economic effects on countries, as many companies do badly after them.
What is a recession?
A recession occurs when a counties economy has gone down for two quarters. A quarter is one fourth of a business year, which occurs every 3 months. Different businesses have different ends of their fiscal season but they all have 4 quarters spaced 3 months apart.
What happens during a recession?
During a recession, there is usually a spiralling decline in the economy. This is due to the demand of all products in general starting to go down. After the demand goes down, the supply of the products are cut, because not as many people want the products. Once supply is cut, there is no need for many workers, resulting in a large number of workers becoming unemployed. With large amounts of unemployment, the economy goes down further.
How do you end a Recession?
Well, there are a few ways to end a recession. The first, and easiest to explain (but least likely), is for another country to give the country in recession money, to boost the economy. The second way to end a recession is to give the companies, and citizens of the country, benefits on taxes, and other such things. This is also how a recession can be ended, and basically what George Bush is trying, in his US Economy Stimulus Package.
That should explain that little quote. If you have any problems understanding this, please e-mail me at kinnigre@otenet.gr.
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