Recession: Definition, Causes, Effects & Solutions
In economics, a recession is defined as a decline in economic growth.
The branch of economics that looks at the economy as a whole. It looks at factors which affect the wider economy rather than individuals. Examples include inflation, trade, unemployment, and economic growth.
In economics, a recession is defined as a decline in economic growth.
There are three main causes of inflation. They are cost-push, demand-pull, and the velocity by which money circulates in the economy.
Some of the common effects of inflation include; loss in purchasing power, higher asset prices, rising inequality, and impacts on cost of borrowing.
Quantitative Easing works in 5 sequential steps: Central Bank Creates Money, Central Bank Purchases Debt, Interest Rates Decline, Businesses/Consumers Borrow More, and Businesses/Consumers Spend More.
Mercantilism is an economic policy whereby a nation aims to maximize exports and minimize the imports.
In economics it is used primarily with GDP to find measurements such as GDP per capita, real GDP per capita, GDP (PPP) per capita, and Gross National Income (GNI).
A trade deficit occurs when a nation imports more goods than it exports. In other words, a nation buys more from other countries, than it sells to other countries.
Money is a medium of exchange. It allows two people to trade without needing what the other wants.
So now we have looked at what money essentially represents, let us look at how inflation is measured. Inflation is usually measured through the CPI, which is based upon a basket of goods.
A free market is where the people in an economy are free to engage in economic activities and transactions without government interference.