ARE recession good for economy?
INTRODUCTION- A recession is a period of temporary economic decline in a country's gross domestic product (GDP) growth for two or more consecutive quarters of a year”. A recession typically comes with sharp rise in unemployment, a decline in the housing market and drop in stock market. A recession is generally considered less harsh than a depression and if a recession continues long enough then it is considered as depression. Even the strongest feel the cracks in the face of an earthquake. The cracks are visible even during a brief recession. At the time of recession markets are disrupted and when the markets are disrupted the effect is clearly seen. There is no particular reason behind the recession. It’s just that an economy which grows over a period of time tends to slow down the growth as a part of the normal economic cycle. An economy typically expands for 6-10 years and tends to go into a recession for about six months to 2 years. A recession normally takes place when consumers lose confidence in the growth of the economy and spend less. This leads to a decreased demand for goods and services, which in turn leads to a decrease in production, lay-offs and more unemployment. Investors spend less as they fear stocks values will fall and thus stock market fall on negative sentiment.
EFFECTS-When there are recessions the female employees feel the winds of change first as they are more vulnerable. They know they will be laid off the jobs. It is difficult to believe, but it is true. Women who work as receptionists, doing odd jobs in the office, public relations and communications are picked out when downsizing is done. Recessions have the tendency to touch sore spots of business. Those which are no longer viable are shut off. For instance publications that are now low on subscription, advertising and sales get the first cut. Most companies spend large sums on advertising in print and electronic media. The PR companies have to work on tighter budgets with maximum mileage. Chances are that different agencies that were used for different products are now merged. A single agency is given the job to do. Staff in the office faces retention as now the work load is divided between only the most necessary employees. The ones left can also forget about the raise in salaries and also work hard.
DISCUSSION- Some business forecasters predict that a recession will hit the economy before the end of the year. And some of them say that recessions can have some benefits. N.C. State University's Mike Walden explains. "This has been a debate that economists have been addressing for really almost a century. And there are some economists who actually think that it is good for the economy to go through a recession every now and again," says Dr. Walden, a professor of agricultural""Number one, they think this sort of plays a cleansing role. That is, a recession will get rid of weaker companies, it will reduce weaker sectors in the economy, and this will allow resources in the economy -- that is, money and technology and machinery and workers -- to move away from declining sectors to growing sectors," he explains. "And these economists, therefore, claim that actually that will put the economy on sounder footing and allow it to grow faster in the future. Most disadvantages I'm afraid”.
A huge disadvantage is quite obvious, everyone has less to spend. This includes normal households, people, business, local and global authorities and everyone.
Here are few disadvantages such as-
- If a recession causes the smaller and newer firms to go out of business then the larger dominant firms will gain more monopoly power. In the long run this will lead to less choice and higher prices .This is a definite disadvantage of a recession
- Most new firms have high set up costs, therefore, a downturn in the economy could make them close down. However, this does not mean that they are inefficient. It just means they are new and struggling to get established.
- This is the argument that the past is a predictor for the future. Basically, if you have high unemployment, then it is more likely to have high unemployment in the future. If people are made unemployed in a recession, it may take a long time for them to find work again. When they are unemployed they lose skills, become de motivated and become less attractive to employers.
- A recession can damage the productive capacity of an economy. Firms can go out of business and therefore shut down their resources. Furthermore in a recession, there will be a significant fall in investment, this can harm the long term development of an economy.
If there are disadvantages then that doesn’t mean that there will be no advantages. Earlier we discussed the one side of a coin now we are left with the other one. As explained earlier there are benefits too. Such as
· It’s a great time to buy a car as the prices get cheaper.
· One can go for a holiday because transaction costs are eliminated.
· It thins out the competition.
· It makes you realize you can’t take anything for granted.
· It reminds you that real wealth isn’t about the stuff you own.
· It fosters out-of-the-box thinking.
· It makes it easier to abandon business-as-usual.
· It brings you back to the basics.
· It accelerates change.
· It causes you to be less wasteful.
· It causes you to get more creative.
· Get rid of the weaker sections of economy.
· It forces you to make tough decisions.
Conclusion- Recession definitely is not as good as it is bad for economy. It is true that there is decline in the housing market. So great time to buy a house and many other things get cheaper but what about the people who have lost lots of money because of the drop in share market and the people who lost their jobs. Unemployment is the greatest dread of any man. How will he feed his family now? During this period employees are being shown the doors. Going back into the old times, America which has been home to many people was turning them out at that time. The people who got their business ruined because of this, sometimes they lose their confidence to start again and these things are not good for economy .I have heard this from somewhere that “When there are cuts in the weekly budgets, priorities changes, when job seekers are dumped there is a big change in lifestyle”. Recession is not necessary to increase economic efficiency. What necessary is the stability not the recession for economy.
So from my point of view recession are not at all good for economy!!!!
Reference-
www.Wikipedia.com
www.ask.com
Submitted by- Yuvika Narang
Submitted to-Prof.Gurdeepak Singh
MBA-1(c)
Q.no-53
INTRODUCTION- A recession is a period of temporary economic decline in a country's gross domestic product (GDP) growth for two or more consecutive quarters of a year”. A recession typically comes with sharp rise in unemployment, a decline in the housing market and drop in stock market. A recession is generally considered less harsh than a depression and if a recession continues long enough then it is considered as depression. Even the strongest feel the cracks in the face of an earthquake. The cracks are visible even during a brief recession. At the time of recession markets are disrupted and when the markets are disrupted the effect is clearly seen. There is no particular reason behind the recession. It’s just that an economy which grows over a period of time tends to slow down the growth as a part of the normal economic cycle. An economy typically expands for 6-10 years and tends to go into a recession for about six months to 2 years. A recession normally takes place when consumers lose confidence in the growth of the economy and spend less. This leads to a decreased demand for goods and services, which in turn leads to a decrease in production, lay-offs and more unemployment. Investors spend less as they fear stocks values will fall and thus stock market fall on negative sentiment.
EFFECTS-When there are recessions the female employees feel the winds of change first as they are more vulnerable. They know they will be laid off the jobs. It is difficult to believe, but it is true. Women who work as receptionists, doing odd jobs in the office, public relations and communications are picked out when downsizing is done. Recessions have the tendency to touch sore spots of business. Those which are no longer viable are shut off. For instance publications that are now low on subscription, advertising and sales get the first cut. Most companies spend large sums on advertising in print and electronic media. The PR companies have to work on tighter budgets with maximum mileage. Chances are that different agencies that were used for different products are now merged. A single agency is given the job to do. Staff in the office faces retention as now the work load is divided between only the most necessary employees. The ones left can also forget about the raise in salaries and also work hard.
DISCUSSION- Some business forecasters predict that a recession will hit the economy before the end of the year. And some of them say that recessions can have some benefits. N.C. State University's Mike Walden explains. "This has been a debate that economists have been addressing for really almost a century. And there are some economists who actually think that it is good for the economy to go through a recession every now and again," says Dr. Walden, a professor of agricultural""Number one, they think this sort of plays a cleansing role. That is, a recession will get rid of weaker companies, it will reduce weaker sectors in the economy, and this will allow resources in the economy -- that is, money and technology and machinery and workers -- to move away from declining sectors to growing sectors," he explains. "And these economists, therefore, claim that actually that will put the economy on sounder footing and allow it to grow faster in the future. Most disadvantages I'm afraid”.
A huge disadvantage is quite obvious, everyone has less to spend. This includes normal households, people, business, local and global authorities and everyone.
Here are few disadvantages such as-
- If a recession causes the smaller and newer firms to go out of business then the larger dominant firms will gain more monopoly power. In the long run this will lead to less choice and higher prices .This is a definite disadvantage of a recession
- Most new firms have high set up costs, therefore, a downturn in the economy could make them close down. However, this does not mean that they are inefficient. It just means they are new and struggling to get established.
- This is the argument that the past is a predictor for the future. Basically, if you have high unemployment, then it is more likely to have high unemployment in the future. If people are made unemployed in a recession, it may take a long time for them to find work again. When they are unemployed they lose skills, become de motivated and become less attractive to employers.
- A recession can damage the productive capacity of an economy. Firms can go out of business and therefore shut down their resources. Furthermore in a recession, there will be a significant fall in investment, this can harm the long term development of an economy.
If there are disadvantages then that doesn’t mean that there will be no advantages. Earlier we discussed the one side of a coin now we are left with the other one. As explained earlier there are benefits too. Such as
· It’s a great time to buy a car as the prices get cheaper.
· One can go for a holiday because transaction costs are eliminated.
· It thins out the competition.
· It makes you realize you can’t take anything for granted.
· It reminds you that real wealth isn’t about the stuff you own.
· It fosters out-of-the-box thinking.
· It makes it easier to abandon business-as-usual.
· It brings you back to the basics.
· It accelerates change.
· It causes you to be less wasteful.
· It causes you to get more creative.
· Get rid of the weaker sections of economy.
· It forces you to make tough decisions.
Conclusion- Recession definitely is not as good as it is bad for economy. It is true that there is decline in the housing market. So great time to buy a house and many other things get cheaper but what about the people who have lost lots of money because of the drop in share market and the people who lost their jobs. Unemployment is the greatest dread of any man. How will he feed his family now? During this period employees are being shown the doors. Going back into the old times, America which has been home to many people was turning them out at that time. The people who got their business ruined because of this, sometimes they lose their confidence to start again and these things are not good for economy .I have heard this from somewhere that “When there are cuts in the weekly budgets, priorities changes, when job seekers are dumped there is a big change in lifestyle”. Recession is not necessary to increase economic efficiency. What necessary is the stability not the recession for economy.
So from my point of view recession are not at all good for economy!!!!
Reference-
www.Wikipedia.com
www.ask.com
Submitted by- Yuvika Narang
Submitted to-Prof.Gurdeepak Singh
MBA-1(c)
Q.no-53
Yuvika - a good try but title not as per the guidelines and poor referencing. The topic is "are recessions good for economy" and not "are recession good for economy" Spellings are very important in business writing?????
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