Part Two: Why do the Rscessions happen?As economists said, Recessions may occur for various reasons. In formal business cycle (or “trade cycle”) models, recessions are “endogenous” which means the recessions are inevitably implied by the structure of the nature of the economy. They say the recessons do not arise on account of any special external shocks. For example, an economy may imply a recession after a period of rising output and employment as an adjustment process. It is inevitably and in which the economy will, in turn, lead to a downturn in output. Recessions may also be caused by “exogenous” shocks when the originating outside the basic model of the economy was disturbed. This could include deliberate policy measures when the authorities adopted it and tried to protect the economy from “overheating” --the attendant inflationary dangers. Recessions may also be caused by external changes. In 1972-1973, the steep rise in oil prices led to the European recession of the mid-1970s. Part One: What do the Recession mean?Part Two: Why do the Rscessions happen?Part Three: How to make money during a recession |
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