Question

Referring to the data below, provide three explanations for why the frequency, duration, and strength of recessions changed from the 1951-2018 period in relation to the 1900-1950 period

Time Period	Number of Recessions	Avg. Length of Recessions	Avg. Drop in GDP During Recessions
1900 - 1950	10	19 months	-7%
1951 - 2018	6	11 months	-2%

Answer 1

Period from 1900-1950:-

1) the starting of the century marked an economic slowdown due to recession that came after about a year of 1901 of market stock crash . The recession lasted for around nearly 2 years an economy witnessed a resting decline in National Product . Industrial and commercial production failed badly with a decline of 16.2 percent and 17.1 percent in the business activity and trade and industrial activity respectively.

2) the the run on Knickerbocker trust company deposits in 1907 lead to Civil monetary contraction and the fall out from this panic led to Congress creating a federal reserve system wind this lead to a recession for about an year which lasted for more than one year leading to a decline of industrial activities up to 30%.

3) the period between 1910 and 1912 was marked by deflation where the national product group by less than 1% and the commercial and industrial activity declined up to 10%.

4) the next recession came from 1913-1914 where the production and real income declined and decline and business activity was 25.9 percent.

5) post world war recession which lasted for around 7 months due to do over production and North America along with influx of labour from returning troops creating high level of unemployment.

6) The Depression of 1921 which lasted for around 1 year and six months where the gross national product declined between 2.5 to 7% with the decline in wholesale prices up to 36.8%

7) The Great Depression of 1929 which lasted for 3 years and 7 months where a banking collapse in the money supply to place in United States point extensive new tariffs contributed to Deep depression. GDP and industrial production, employment and prices fell and the economy witnessed the highest GDP decline of 26.7 percent with the record breaking unemployment level of 24.9 percent

8) recession on 1945 that lasted for 8 month witnessing a decline in GDP for 12.7% created by a decline in government spending at the end of World War II

9) the recession of 1937 to 1938 followed by the Great Depression where the depression was created by reduction and business investment

10) recession of 1949 followed by a period of tight monetary policies

Period from 1950-2018:-

1) the reception of 1953 where Federal Reserve reasserted its independence from the US treasury and change its monetary policy which became more restrictive due to fear of inflation because of bubble forming

2) the recession of 1960 where the Federal Reserve raised its interest rates.

3) the recession of 1973 e which lasted for around one year leading to a decline in GDP for around 3.2 % created by 1973 oil crisis which increase the oil prices leading to a stock market crash

4) early 1990 recession in the United States created by the date accumulation of 1980 combined with weekend economy and a subsequent 1990 oil price shock.

5) early 2000 recession created by the collapse of Dot com bubble, fallen business outlays the World Trade Centre attack which contributed to a economic slowdown

6) the great recession of 2008 which was created by the mortgage crisis leading to collapse of housing bubble in United States point this is one of the major recessions faced after the Great Depression which affected the countries globally .the large Financial Institutions collapsed leading to a great economic slowdown in automobile industry

Reasons for change in frequency, duration and strength of recession:-

1) establishment of Federal deposit Insurance Corporation has increased regulation of the banking sector

2) use of fiscal policy in the form of automatic stabilizers has been the main reason which has led to decrease in the frequency of recessions as well as the duration and strength of sessions because these measures helps to elevate cyclical volatility.

3) the creation of Federal Reserve system which has become the source of stability due to its fiscal and monetary policies along with numerous causes like public policies industrial practices and Technology which has changed and opened the world into a global economy and the globalisation measures that have been taken from time to time have led to decrease in the frequency of recessions.