Recession ppt by shoshith
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Transcript of Recession ppt by shoshith
RECESSION
BY
SHOSHITH
Road map• What is recession?• Causes of recession• Impact of recession• How to come out of recession.
WHAT IS RECESSION?
In economics, the term recession describes the reduction of a country's gross domestic product (GDP) for at least two quarters.
The usual dictionary definition is "a period of reduced economic activity"
• In macroeconomics, a recession is a decline in a country's gross domestic product (GDP), or negative real economic growth, for two or more successive quarters of a year
Causes of recessions
• Currency crises• Energy crisis• Under-consumption• Overproduction• Financial crisis
Currency crises
A currency crisis, which is also called a balance-of-payments crisis, occurs when the value of a currency changes quickly, undermining its ability to serve as a medium of exchange or a store of value. It is a type of financial crisis and is often associated with a real economic crisis
Energy crisis
An energy crisis is any great bottleneck (or price rise) in the supply of energy resources to an economy. It usually refers to the shortage of oil and additionally to electricity or other natural resources. An energy crisis may be referred to as an oil crisis, petroleum crisis, energy shortage, electricity shortage or electricity crisis
UnderconsumptionIn underconsumption , recessions
and stagnation arise due to inadequate consumer demand relative to the amount produced
Overproduction
In economics, overproduction refers to excess of supply over demand of products being offered to the market. This leads to lower prices and / or unsold goods
Financial crisis
The term financial crisis is applied broadly to a variety of situations in which some financial institutions or assets suddenly lose a large part of their value
How to know recession?
Indicators to say a nation is in recession;
• - People buying less stuff - Decrease in factory production • - Growing unemployment • - An unhealthy stock market
IMPACT OF RECESSION ON IT SECTOR
The impact of Recession is unpredictable. The main effect of recession is in IT sector and is mainly related to the job loss and unemployment
How to come out of recession?
It is unhealthy for any nation to be in Recession;So, Government will take certain countermeasures to eliminate or reduce the Effect of recession for turnaround;
Important Point: Today, it is a market Economy
Producers;Can produce and
sell at their prices
Consumers;Can decide to
buy or not;
But, Government does not have direct control on Producers’ & the Consumers’ behavior; But, they can influence millions of Producers & Consumers with Government’s policies;
Government has 2 plans
Fiscal Policies
(By Govt.)
Monetary Policies(By RBI)
Government influences the economy by changing howit (Government) spends and collects money
RBI manipulates the available supply of money in the country
Fiscal Policies
Government influences the economy by changing how it (Government) spends and collects money
1] Tax cuts for businesses or for individuals
2] More Spending by Govt. to create jobs
3] Automatic fiscal policy; Unemployment Insurance
More moneyavailable forspending
Individuals getsalary and spendmoney
Some income tounemployed people to spend
Demand picksup; Market can recover;
MonetaryPolicies
Government manipulates the available supply of money in the country
1] Reduce reserve ratio
2] Lower the interest rates
3] Use its own reserved money to buy Govt. bonds
More moneyavailable for bankto give loans
Individuals takemore loan
It becomes anincome to Govt.to inject moneyinto the market
Demand picksup; Market can recover;