recession

Question 1

definition of a recession?

Answer 1

when the economy experiences a negative growth rate (e.g. of GDP) for 2 consecutive quarters (6 months)

Question 2

characteristics of a recession:

Answer 2

• increased unemployment (due to reduced demand)
• decreased consumer confidence (scared of unemployment)
• businesses go bankrupt (less profits due to less demand, less profits due to less wages, hours and productivity of workers)
• PPF shifts inwards
• decrease in GDP
• reduced inflation (in theory)
• increased government borrowing (fewer pay income tax and money is spent on benefits)
• tax revenues