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loser
101 – Recession
Expenditure equation for totalling up GDP (Keynesian Equation)
Y = C +I + G +NX
C = consumption expenditures
I = investment expenditures
G= government purchases of goods and services
NX= Net exports
A business cycle is the pattern of economic expansion and contraction
Recessions, or contractions are the periods of time during Y falls
Recoveries or expansions are the periods of time during which Y increases
Macroeconomics policy natural causes
1. Making the long-run average line as steep as possible
2. Reducing the size of business fluctuations around the long-run average growth line
Process during economic downturn
Prices all over the economy fall
The economy again produces at fully employment
Finally what causes a recession?
The U.S. based National Bureau of Economic Research (NBER) defines a recession more broadly as "a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales.