Question

What, exactly, is the “Business cycle”? 2. What events, in theory, could cause a ‘recession’? 3. WHAT IS A RECESSION, exactly? ARE WE IN ONE NOW? Why or why not?

Answer 1

Business cycle can be illustrated as the diagram shown above. It says that there are four four economical phase in which economy moves. If an economy is in tough period where unemployment is at its high and less amount of goods are produced. They will enter into expansionary phase where people will start getting jobs and output rises and reaches its peak where employment is at its high. It si followed by contraction where people start loosing their jobs.

IGN Expansion contraction cowocus trough Time

Recession can be classified as fall in economic activities where less goods are prdouced and traded which results in falling GDP in an economy. There is high unemployment which reduces willingness to pay of people. A decline in that puts pressure on producers to reduce the price of their goods such that it does not build inventories in their warehouses. We are not in a recession but soon we will enter into as due to COVID-19, all industries, market are temporarily shut down. Contractual employees have lost their jobs which will be a challenging factor to find another jobs as soon as lockdown period is over. Loss faced by many businessman and industrialist would take the economy down and become a reason of recession.