Sunday, July 25, 2010


n In economics, a recession is a business cycle contraction, a general slowdown in economic activity over a period of time. During recessions, many macroeconomic indicators vary in a similar way. Production as measured by Gross Domestic Product (GDP), employment, investment spending, capacity utilization, household incomes, business profits and inflation all fall during recessions; while bankruptcies and the unemployment rate rise.

Various problems during recession in business.
n Problem of Liquidity.
n Fall in Gross Domestic Product (GDP) .
n Variation in profitability .
n Fall in inflation.
n Increase in bankruptcies and unemployment.
n Fall in Stock markets.

Remedies during recession (From government side )
n Increasing government spending and decreasing taxation by change in fiscal policy.
n Increasing money supply by change in monetary policy.

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