1.RECESSION:

America is the most effected country due to global recession, which comes as a bad news for INDIA. INDIA have most outsourcing deals from the US. Even our exports to US have increased over the years. Exports for January declined by 22 per cent.

YOU THOUGHT, you secured a seat in the best college and that was the gateway to a secured future and a wonderful pay package. Once the placements begin, your campus would be bustling with those who would want to hire you and if you are an IIM graduate, sky is the limit. Ironically, if you are graduating this year, the scene is exceptionally sad. Reports from the campus of IIM-A bring out that the club class of their regular recruiters have actually missed being on their campus this year. This includes Lehman Brothers, Deutsche Bank and Merrill Lynch. There is news that 17 students who jointly worked with Lehman Brothers for an internship have not got any offers.

In economics, a recession is a general slowdown in economic activity in a country over a sustained period of time, or a business cycle contraction. During recessions, many macroeconomic indicators vary in a similar way.

Governments usually respond to recessions by adopting expansionary macroeconomic policies, such as increasing money supply, increasing government spending and decreasing taxation.

In past few weeks America reported job losses of more than 530,000, the biggest single month figure since 1974, taking the US unemployment rate to 6.7 percent, the highest in 15 years.

The US, Eurozone, UK and Japan are now officially in recession, in the sense of having experienced two successive quarters of negative growth. Several analysts predict that the rate of contraction of the US economy in this final quarter of 2008 may be at an astonishing annual rate of 4 to 5 percent.

The US, the world's largest economy, will contract by 0.7 Per cent and the euro area by 0.5 Per cent in 2009.

2.WHAT CAUSES IT?:

A recession normally takes place when consumers lose confidence in the growth of the economy and spend less.

This leads to the decreased  demand for goods and services ,which in turns lead to decrease in production,lay-offs and  a sharp rise in unemployment.

3.HOW TO FIGHT RECESSION?:

Tax cuts are the first  step that government fighting trends  or a full fledged recession proposes to do.

4.EXAMPLE:

When the economy is strong, most people are employed and making money. There will then be a larger demand for goods such as food, electronics & vehicles and this increases so much that the supply can not keep up with the demand

This excess demand creates a rise in prices, or inflation. As prices go up, salary's need to rise to keep up with the rising prices of goods The rise in employment cost for companies translates into a rise in prices for most items.

When the prices for goods and services get too high, consumers decide goods are too expensive and slow down or stop buying. When the demand decreases, companies lay off workers because they don't need to make as much as before.

Decreasing demand fuels declining prices, which means the economy is in a recession.

Companies counter act this by lowering prices to spur the demand. As demand picks up, people begin buying again, fueling the need for greater supply. And the cycle starts again.


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