Even during the economic downturn. What is a recession in the economy. The Economic Situation in Russia: A Brief History of the Current Crisis

a) reduction in unemployment benefits;

b) falling stock prices, lower demand for labor;

c) reduction in tax revenues;

d) reducing investment in equipment with a long service life.

17. External (exogenous) causes of cyclical development do not include ...

a) natural and climatic phenomena;

b) fluctuations in investment demand;

c) political phenomena;

d) all answers are wrong.

18. During a recession, the most contracted ...

a) consumer spending on the purchase of medicines;

b) the level of wages;

c) the amount of entrepreneurial profit;

d) public procurement of goods and services;

e) all of the previous is true.

19. The economic cycle is linked ...

a) with the action of only external factors;

b) the action of only internal factors;

c) factors that mainly affect the dynamics of aggregate demand;

d) factors that mainly affect the dynamics of supply;

e) exclusively random political factors.

20. One to two years after the end of the recession, there is ...

a) reduction in the level of employment;

b) reduction of consumer costs for the purchase of durable goods;

c) stability or falling of the level of profit;

d) everything above is wrong.

Practical task 2.4.1:solving problems on the topic of the course.

A) Calculate the level of registered unemployment, based on the following data: the number of labor resources in the region - 400 thousand people, the number of able-bodied working-age population - 1360 thousand people, the number of unemployed registered with the state employment service - 40.8 thousand people

B) The number of employed in the economically active population - 108 million people, the number of unemployed - 32 million people. A month later, out of 108 million people who had a job were dismissed and are in search of work - 0.3 million people, 2 million people. of the officially registered unemployed have stopped looking for work.

Determine: a) the initial level of unemployment; b) the number of employed, the number of unemployed and the unemployment rate in a month.

C) It is known that in the 1st year the economically active population was 100 million people.

A. Cyclic fluctuations

The annual growth of the economically active population is 1 million people. The natural rate of unemployment is 6%. Actual unemployment had the following dynamics: 1st year - 10 million people; 2nd year - 10 million; 3rd year - 9 million; 4th year - 8 million; 5th year - 7 million; 6th year - 6.3 million; 7th year - 6.36 million; 8th year - 6.5 million; 9th year - 7.0 million; 10th year - 8.0 million people. Based on this data, determine what full employment, natural unemployment, cyclical unemployment and actual employment were equal to over the ten years.

D) In ​​a country with a developed market economy, the inflation rate and the unemployment rate changed as follows:

Draw a Phillips curve based on this data.

E) If the price index was 110 last year and 121 this year, what will be the inflation rate this year? What does the “rule of magnitude 70” mean? How long will it take for prices to double if inflation remains at 2%, 3%, 5%, 10% per year?

· Inflation rate for the second and third years;

· Percentage change in real income, if the nominal income in the second year compared to the first year increased by 7%, and in the third year compared to the second - by 10%.

Data for calculating the inflation rate

G) Answer the crossword puzzle questions.

a crisis

economic decline

Alternative descriptions

Disorder of economic life caused by contradictions in the development of society

Severe shortage of something

Relative overproduction of goods

Resignation of the government

Peak, fracture disease

A sharp, abrupt change in anything

Severe transient state

A difficult situation

A difficult, difficult stage of development with big changes

Crucial moment

Mountain of problems

Film by Ingmar Bergman

This word in Chinese consists of two characters: one means "danger", the other - "opportunity"

... "Recession is when you have to tighten the belt, and ... - when there are no longer any pants" (aphorism)

The state of our economy in August 1998

The story of the Russian writer M. Zoshchenko

One problem after another

Steep fracture

... "Bad" in the economy

Failure in the economy

Big problems

All the problems at once

An overgrown lump of problems

Economic ailment

Aggravation

Sharp, abrupt fracture

Happens in middle age

A sharp improvement in the patient's condition

... … middle aged

Difficulty during the course of the disease

Exacerbation of the disease

Deficit of money-mani in your pocket

Caribbean

A drastic change in the economy

Sharp fracture during the course of the disease

Financial decline

World financial ...

The difficult situation in the economy

Agony of the genre

Disease of the economy

Caribbean ... 1962

The collapse of the economy

... "Peak" of hypertension

Economic and financial downturn

The lingering malaise of the economy

Economic problems

Failure in the economy

... "... middle aged" (film)

Periodic breakdown of the economy

A difficult situation

In medicine: fracture during the course of the disease

Economic downturn

middle-aged "(film)

... "Peak" of hypertension

M. lat. * fracture, psrevorot, decisive time of the transitional state. Crisis or fracture of the disease; crisis or monetary coup. Doctors call a crisis a sudden upheaval in a disease, for example. sweat, vomiting, bleeding, and lysis, gradual resolution. Critical, relative to the crisis (see also criticism)

Aggravated. illness

Acute flaw

Topic 2 Macroeconomic instability

S: Okun's Law describes the inverse relationship between ...

+: unemployment rate and rate of change in real GNP

-: unemployment rate and GNP at current prices

-: unemployment rate and interest rate

-: unemployment and inflation rate

S: Demand inflation can be caused by such reasons as ...

+: wage growth

+: consumer inflation expectations

-: adaptive expectations of producers

-: money supply growth

S: Real wages with an increase in nominal wages by 1.2 times, prices for consumer goods by 12% ...

+: increased by 8%

— : decreased by 8%

— : increased by 12%

— : decreased by 12%

S: The deviation of the real distribution of income from absolute equality is expressed by the curve ...

-: Phillips

+: Lorenz

-: Laffer

S: The natural rate of unemployment suggests ...

-: 100% employment of the working-age population

-: the presence of cyclical and hidden unemployment

+: the presence of structural and frictional unemployment

S: Last year, the actual unemployment rate was 10%, natural - 5%, Okun's coefficient is 2, potential GDP is 120 units, actual GDP is ...

S: Which of the following processes is not related to the ascent phase?

-: price increase

+: growth in payments from various social funds

-: increase in tax revenues

-: investment growth in the private sector

S: During the recession, there is ...

-: reduction in the level of employment

-: reducing consumer spending on durable goods

+: all previous answers are correct

S: In the period of recession, ...

-: consumer spending on drug purchases

-: wage level

+: value of entrepreneurial profit

-: all previous answers are wrong

S: The numerical value of which of the following indicators falls after the onset of the recovery phase and increases after the onset of the decline phase?

-: GNP volume

-: average workweek

-: industrial production

+: the volume of inventories in the manufacturing industry

S: Full-time employment is a period when ...

-: anyone looking for a job finds it

+: the unemployment rate coincides with the aggregate of the levels of frictional and structural unemployment

-: there is 100% employment of labor resources

-: the levels of real and cyclical unemployment are the same

S: A person who hopes to get a job again soon ...

-: refers to the category of employed

+: refers to the unemployed

-: not included in the labor force

-: considered part-time

S: Those who have lost their jobs due to the recession in the economy fall into the category of the unemployed, covered by ...

-: frictional form of unemployment

-: structural form of unemployment

+: cyclical unemployment

-: all previous answers are not correct

S: According to Okun's Law, a two percent excess of the actual level of unemployment over its natural level means that the lag of actual GDP from potential is ...

S: Which of the following actions acts as a means by which an individual is insured against the risk of unforeseen inflation?

+: inclusion in the labor contract of a clause providing for the indexing of wages in the long term

-: offering your friend a loan with an interest rate lower than the bank

-: opening a new business based on loans received from the bank

-: all previous answers are correct

S: Which of the following is causing demand inflation?

-: rising prices for raw materials and transport services

-: increase in interest rate

+: increase in wages

-: growth in government spending

S: Cost inflation is caused by ...

-: falling prices for equipment, raw materials and supplies

+: rising prices for factors of production

-: excess of aggregate supply over aggregate demand

-: freezing wages and prices

Topic 3. Money and banks

S: Open market operations as an instrument of monetary (monetary) policy mean ...

+: buying or selling government bonds by the Central Bank

— : the activities of the Ministry of Finance to change the state of the state budget

— : provision of loans by the Central Bank to commercial banks

— : the activities of the Ministry of Economy to change the tax system

S: Monetary policy instruments include ...

+: reserve requirement

+: open market operations with securities

-: unemployment benefits

S: There is a transactional demand for money because money is ...

+: means of circulation

-: store of value

-: a measure of value

-: payment

S: Speculative demand for money depends on ...

+: interest rates

-: employment rate

S: What is NOT a function of the Central Bank?

+: accepting deposits from the population

-: money issue

-: maintaining the stability of monetary circulation

-: open market operations

-: interest rate regulation

S: The cheap money policy presupposes ...

+: decrease in reserve rate

+: purchase of government securities

-: reduction in the rate of inflation

-: increase in discount rate

S: What determines the value of a 100 ruble banknote?

-: the cost of the paper from which it is made

-: the gold that provides her value

-: the cost of labor invested in its manufacture

+: the number of goods and services that can be paid for with this banknote

S: The maximum amount of money that commercial banks can "create" depends on the demand for loans and on ...

-: the amount of cash in the hands of the population

+: reserve requirements

-: the amount of gold and silver in the vaults of banks

-: the amount of paper money issued by the Central Bank

S: Mr. N deposited 10,000 rubles into a commercial bank account.

Tests_Economics

What is the maximum amount of money that the banking system can "create" on the basis of this deposit with a 25% required reserve ratio ...

+: RUB 30,000

-: 50,000 rubles.

S: The purchasing power of money ...

-: rises during inflation

+: decreases during inflation

-: decreases during deflation

-: not affected by inflation and deflation

S: The term "demand for money" means ...

-: the desire to hold securities that, if necessary, can be converted into money at a fixed price

-: the amount of money that entrepreneurs would like to use to provide a loan at a given interest rate

-: the desire to store part of the income for a "rainy day"

+: the same as the sum of transactional and speculative demand

S: The demand for money for transactions changes as follows ...

-: increases with increasing interest rate

-: increases with a decrease in the interest rate

-: decreases with decreasing nominal GDP

+: declines as nominal GDP rises

S: If the demand for money and the supply of money continue to grow, then ...

-: the equilibrium amount of money and the interest rate will rise;

-: the equilibrium amount of money and the interest rate will decrease

+: the equilibrium amount of money will grow, and the change in the equilibrium rate cannot be predicted

-: the equilibrium interest rate will rise, and the change in the equilibrium amount of money cannot be predicted

S: The total money supply increases whenever commercial banks ...

-: increase their deposits at the central bank

+: increase the volume of loans to the population

-: increase their liabilities on current accounts by receiving cash from the population on deposits

-: withdraw part of their deposits at the central bank

S: Required reserve ratio ...

+: introduced primarily as a means of limiting the money supply

-: introduced as a means of preventing the withdrawal of deposits

-: is the average amount of money needed to meet the needs of the population

-: none of the answers are correct

S: Surplus reserves of a commercial bank consist of ...

-: assets that, not being money, can be quickly converted into money if necessary

-: money that should be kept in the bank not because of the current need for them, but based on the requirements of the law

+: the difference between the amount of actual reserves and the amount of required reserves

-: the difference between the value of assets and the amount of deposits in current accounts

S: If the required reserve ratio is 100%, then the value of the money multiplier is ...

S: Bank X, one of many banks, has a deposit of $ 8,000. The required reserve ratio is set at 20%. This deposit is able to increase the amount of loans provided by at least ...

-: undefined value

S: Suppose that the transactional demand for money is 10% of nominal GDP, the money supply is $ 450 billion, and the speculative demand for money is shown in the table:

if the nominal volume of GDP is $ 3,000 billion, determine the equilibrium interest rate ...

S: When a person buys a TV in a store and pays for it, then money performs the function ...

+: means of circulation

-: store of value

-: measures of value

-: means of accumulation

S: Speculative demand for money depends on ...

-: growth rate of gross domestic product

-: economic growth rates

-: employment rate

+: interest rates

S: The main function of money DOES NOT RELATE the function ...

+: redistribution of income

-: media of exchange

-: counting unit

-: means of payment

S: In the Russian Federation, the role of the discount rate is performed by ...

-: required reserves ratio

-: bank commission rate

+: refinancing rate

-: interest rate on deposits of commercial banks with the Central Bank

Use the site search:

With economic growth

the rate of increase in real national income exceeds the rate of population growth

population growth rates exceed the growth rates of real national income

population growth rates correspond to the growth rates of real national income

the rate of increase in real national income lags behind the rate of population growth

61. Externalities include ...

£ decrease in profits for manufacturers of certain goods

£ costs and benefits of third parties

£ reduction in government revenues

£ costs and benefits not included in the market price of the good

62. Growth is observed during a downturn ...

production of goods and services

profits of enterprises

unemployment rate

wages

63. The main classification feature of economic cycles is ...

flow mechanism

causation

cycle frequency

type of economic policy

Regulation to correct it is impossible and ineffective

The production of commodity A is associated with the emergence of a positive external effect. From the point of view of public interest in the industry producing good A, there is ...

underutilization of resources

optimal use of resources

overuse of resources

either overuse of resources or underutilization of resources

65. Higher education is an example ...

a service the provision of which must be funded by both the government and private consumers

purely public good

the benefits of free access

purely private good

66. Modern Western economic theory understands a recession as ...

crisis and depression

revitalization and recovery

crisis and rise

crisis and recovery

67. Positive externalities are manifested when ...

lower food prices

vaccination of workers

production of children's goods

helping the poor

How, when and why do booms and busts occur in the economy?

Analyzing the dynamics of economic development, scientists in the 19th century drew attention to the cyclical nature of business activity and identified regular fluctuations in this area. It was found that the economies of various countries function between the extreme points - boom and depression. Periodically, there are such phenomena in the market as an increase or, on the contrary, a decrease in demand, fluctuations in the level of employment, an increase or decrease in production volumes, a change in the price level, etc. Moreover, they occur with a certain frequency and in a certain sequence.

Such regular fluctuations are called economic cycles. Cyclicality is inherent in the economy of both individual countries and the world as a whole. It is reflected, as a rule, in almost all areas of the economic life of states. Science defines four cycles of economic development, following one after another: boom (peak), crisis (recession), depression (bottom), revival (rise). There are long economic cycles, repeating every 20-25 years, and short, repeating every 5-10 years. But there is no clear formula for predicting their duration.

Between boom and depression

A boom is the peak of business activity, the high point of the undulating curve along which the economy is developing. At this point, there is an increase in production and a maximum decrease in the unemployment rate. As a rule, at this time there is an increase in the inflation rate.

Boom gives way to recession, during which there is a decrease in production and a decline in business activity. This period is characterized by an increase in the unemployment rate and stabilization of the price level.

The bottom of the business cycle is the lowest point of the curve.

Economic theory II course test

At this stage, production experiences the greatest decline and the highest unemployment rate is observed. It is believed that this phase of the cycle usually does not last long, which is confirmed by historical facts. However, the Great Depression of the 1930s, despite periodic fluctuations in business activity, lasted for almost 10 years.

After reaching the lowest point of the cycle, an upward phase begins, which is characterized by an increase in the number of employed population and a gradual increase in production volumes. Investments in its modernization are gradually returning to the previous level, prices for raw materials and materials begin to rise.

This period is also distinguished by a general increase in the inflation rate.

Why are there downturns in the economy?

It is impossible to clearly name the reasons for the cyclical development of the economy. Some scientists associate it primarily with the introduction of technological know-how in various areas of production, which leads to an increase in production volumes, changes in the level of employment and the level of prices.

According to other experts, the cyclical nature is of a monetary nature. So, the change of cycles can be facilitated by an excessive inflow of money into the country's economy or, conversely, a shortage of funds. An increase in the volume of money supply, including cash in the hands of the population and bank loans, stimulates the development of the economy, while a decrease in the volume of money supply, on the contrary, leads to a recession. At the same time, a continuous inflow of funds into the country's economy usually leads to an excessive increase in the inflation rate, so the authorities are trying to withdraw the excess money supply.

External influences, such as wars and natural disasters, can also be the reasons for the change in economic phases. Such shocks upset the equilibrium in the economy and trigger reciprocal fluctuations, such as changes in world oil prices.

In addition to the global pattern leading to the change of phases, the economy is also influenced by seasonal phenomena. For example, before the New Year and Christmas, the economy usually picks up, and during the summer holidays, business activity decreases.

Social Studies

11th grade textbook

§ 2.4. Economic cycle

It is clear from the definition of economic growth that it is long-term, that is, ideally, there should be a constant increase in GDP. But this does not happen in the real economy: the growth of production and business activity is replaced by a decline in production, a decrease in GDP, then the economy grows again. The economy, therefore, develops cyclically. A sharp drop in production, as you know, is called an economic crisis.

The first economic crisis occurred in England in 1825, and the cyclical crisis of 1857 first affected all the leading countries of the world, becoming a global one. Later on, crises occurred regularly. They were characterized by a sharp drop in production, bankruptcies of many enterprises, an increase in the unemployment rate, and a drop in the purchasing power of the population. Having reached the lowest point, the economy begins to gradually recover from the crisis: production grows, unemployment decreases, incomes rise, aggregate demand and aggregate supply increase, the economy "overheats" again (that is, production and consumption reach their maximum), and this leads to another crisis. The economy develops in such cycles.

What is the economic cycle?

Economic cycle is an alternating alternation of ups and downs in the movement of real GDP.

The economic cycle consists of four phases, successively replacing each other.

• The first phase is an economic upturn, which is characterized by almost full employment of the active population, a constant expansion of the production of all goods and services until all production capacities are used, an increase in income, and, consequently, an expansion of aggregate demand. All production figures are peaking. At some point, aggregate supply begins to exceed aggregate demand. Manufacturers cannot sell their goods, pay off their creditors and suppliers, bankruptcies begin. Consumers fear layoffs and cut their spending. Trade does not take new goods for sale, industry reduces production and does not demand resources. This is the beginning of the recession.
• The second phase is an economic downturn, or recession, which is characterized by a decline in production and consumption, income and investment, and a drop in the level of GDP. Finally, all indicators reach their lowest point - the crisis.
• The third phase is depression, when the economy, having reached the bottom, is marking time, because it takes time for it to gradually gain momentum.
• The fourth phase is a revival, which is characterized by a gradual increase in production, because demand grows, industry begins to attract additional labor, trade orders more and more goods, incomes of the population and profits of entrepreneurs grow. This phase continues until all indicators reach the peak of the previous recovery phase, after which a new recovery and a new economic cycle begins.

How long is the business cycle?

This is a very important issue that worries not only theoretical economists, but also politicians, trade union leaders and businessmen. If one knew about the onset of the crisis, one could prepare for it. But, as a rule, crises come suddenly.

In the XIX century. the cycle was approximately 8-10 years: crises were observed in 1825, 1836, 1847, 1857, 1866, 1877, 1882 and 1890. K. Marx believed that the material basis of the periodicity of cycles is the replacement of fixed capital, which at that time served for about 10 years. The crisis is precisely what gives rise to an incentive for the renewal of fixed capital, on the one hand, and stimulates the recovery phase on a renewed basis, on the other. In addition, for 10 years, technical progress has not stood still, therefore, the equipment has undergone not only physical, but also obsolescence, i.e.

Test tasks. 1. The main goal of economic growth is to increase:

That is, it is outdated, does not correspond to the new state of the art.

In the XX century. cycles have become shorter and crises, especially after World War II, less severe.

The longest and most destructive crisis of the 20th century. occurred in 1929-1933. and was called the Great Depression. In the United States, the decline in production continued for 4 years in a row, real GDP fell by 40%, per capita income fell by 30%, one in four people lost their jobs, and many also lost housing for which there was nothing to pay. Industry was particularly affected. For example, in terms of pig iron production at the lowest point of the crisis, the United States was pushed back 42 years (relative to the level of 1890), England - by 76 years (to the level of 1856), Germany - by 45 years (to the level of 1887). ).

Modern crises are not so deep: the decline in production continues on average for 10-12 months, and the decline in real production is from 1.5 to 5% (US data). In the United States, economic recessions took place in 1973-1975, 1979-1980, 1981-1982, 1990-1991. The longest recovery period in the United States lasted from 1982 to 1990, and the shortest from 1980 to 1981.

What are the reasons for the cyclical development of the economy? There is also no single answer to this question among economists.

Some scientists explain economic cycles by external (exogenous) reasons:

• wars, due to which the economy is rebuilt for the production of military products, additional resources and labor are attracted, and after the end of hostilities, a recession sets in;
• the impact of some other external factors, for example, the so-called oil currents, when oil-producing countries united into one cartel - OPEC - and sharply raised oil prices, which caused the largest post-war world crisis of 1973-1975, in which the United States the decline in production lasted 16 months and amounted to about 5%;
• major innovations (railways, cars, electronics) that have a large impact on investment, production, consumption, price levels;
• even spots on the Sun, which affect the productivity of agricultural crops, and crop failures can lead to a crisis of the entire economy.

Other economists explain economic cycles by internal (endogenous) factors:

• monetary (monetary) policy of the government: a large amount of money gives rise to an inflationary boom, and an insufficient amount of money reduces investment and leads to a decline in production;
• a change in the ratio of aggregate supply and aggregate demand, when, for example, radically new goods (personal computers) appear and demand switches to them, and manufacturers of old goods (typewriters) have to close production and transfer resources to other industries;
• a decrease in production caused by the production of marketable products, that is, the accumulation of large stocks due to low demand or high prices, when trade refuses goods that it cannot sell, and the aggregate supply exceeds the aggregate demand.

Whatever the reasons for the existence of economic cycles, they continue to affect the economy, although this impact in a modern market economy is not as devastating as it used to be. The state and big business have learned to influence the economic cycle. Many governments in developed countries resort to countercyclical regulation methods that smooth out peaks of development and prevent the economy from sinking to the very bottom. With the help of marketing, big business recognizes long-term trends in demand for certain goods and does not allow their overproduction.

Although economic cycles and especially the phase of the crisis lead to such negative phenomena as unemployment and inflation, there are also positive aspects: it is the crisis that makes it possible to match aggregate demand and aggregate supply, identify the most viable firms and continue the development of the economy on a new technical basis.

The cyclical nature of the economy is a special form of development with uneven economic growth in different periods, which are called stages or phases of the economic cycle.

The economic cycle includes four phases:

• crisis (recession, recession),
• depression (stagnation),
• revival (expansion),
• rise, ending with a boom or peak.

Thus, economic cycles or waves- These are periodic fluctuations in economic or business activity, during which the market economy passes from one phase to the next the same.

Let's consider the features of each phase of the economic cycle.

The phases of the economic cycle are shown in the figure.

The first phase of the economic cycle is a crisis, i.e. a sharp violation of the existing balance.

A crisis differs from an imbalance between supply and demand for a particular product or in any branch of the economy in that it arises as a general overproduction, accompanied by a rapid fall in prices, bank bankruptcies and the shutdown of production enterprises, an increase in loan interest, and unemployment.

A crisis is the most devastating phase of any industrial cycle. This is due to its surprise for entrepreneurs, they, as a rule, are not ready for it. Therefore, the crisis is in the nature of a collapse. Before him, the economy is flourishing in all respects, everyone gets big profits, and then a crisis begins, and the foundations are crumbling not in one industry, but in all at the same time.

In the recession phase of the economic cycle, demand begins to decline, while supply remains at the same level. Enterprises work, producing products in large volumes than required by the current market environment. The market is overflowing with goods, demand is rapidly decreasing, but production continues, although the volume of inventories is already very large. A rapid fall in prices begins, the interruption of the mechanism of the circulation of capital. The crisis of non-payments, lack of cash, difficulties with sales lead to a belated but rapid curtailment of production, which leads to an increase in unemployment and a decrease in the purchasing power of society, which further complicates marketing.

A period of crashes begins, the closure of enterprises, banks "burst", as loan defaults are massive. In the crisis phase of the economic cycle, unemployment rises sharply, reaching its critical point. Naturally, in such conditions, no one thinks about capital investments. Firms are not able to pay current payments, as there is a "freeze" of capital in the form of unsold goods.

At this stage of the economic cycle, in a downturn, there is a general pursuit of money, so the loan payment - the interest rate on loans - is growing rapidly. Stock market crashes, a wave of bankruptcies and business closures mark the end of the crisis and the beginning of the depression. The recession presents such a bleak picture. The actual recession phase in the economic cycle usually does not last long, the crisis looks prolonged if it is combined with depression.

Depression (stagnation)- this is the phase of the economic cycle in which a certain stabilization of the situation takes place. "Depression is a period of adaptation of economic life to new conditions and needs, a phase of finding a new balance."

The crushing fall stops, as there is nowhere else to "fall". Macroeconomic indicators, prices, wages, unemployment stabilize at a certain level. After the end of the recession, the upward trend is not outlined immediately, since production is carried out on a narrowed basis. This is due to the fact that manufacturers are afraid to expand production due to the lack of confidence that there will be sufficient demand for the manufactured products.

In the depression phase of the economic cycle, confidence in a stable environment is difficult to recover. Entrepreneurs look around with caution, even after some stabilization in demand, they are afraid to invest additional funds in their business. This phase is long lasting and may be the longest in the entire economic cycle. The stagnation can last from several months to several years.

With a general stagnation in the economy, only one indicator continues to change: the lending rate is falling due to the fact that the "surviving" entrepreneurs have free money due to low production costs, because wages have frozen at their lowest point. If we take the classic version of the economic cycle, then in this phase the rate of interest on cash loans drops to its lowest point within this cycle.

During the depression stage, prices stabilized at a low level stimulate consumption, and the economic cycle continues. As a result of the increased demand for civilian goods, the demand for means of production also increases. But the crisis showed the insolvency of fixed capital in the technical and technological sense. The first investments are made to renew it, and if they turn out to be successful, the investment level starts to rise slowly. Production begins to unfold slowly. The next phase of the economic cycle begins - the stage of recovery.

Revitalization- this phase of the economic cycle is characterized, first of all, by the expansion of the production of means of production. Therefore, the impulse begins with enterprises that produce equipment, elements of fixed capital. "The recovery phase is a phase of slow growth in production caused by the first successful investments, a gradual increase in prices, which entails an increase in wages, an increase in employment, profits. The reaction to this is an increase in interest rates."

A characteristic feature of this phase of the economic cycle is the absence of clear boundaries for the beginning of the phase. This is due to the fact that after a depression, various sectors of the economy begin to come out of it after different periods of time. In a recovery period, entrepreneurs venture to take their first steps forward, finding that the risk is justified and the investment is profitable. Production expands following the growth of demand, unemployment decreases, wages rise. At some point, economic indicators reach the pre-crisis level, and then the next phase of the economic cycle begins - an upswing.

It is precisely the achievement of the pre-crisis level of production that is the end of the recovery and the beginning of the recovery phase of the economic cycle.

Rise- all economic indicators begin to rise at a much faster rate than in the previous phase. Prices begin to rise, but they are offset by an increase in wages, as a result, the entire volume of output is absorbed by the growing demand of the population. However, in this phase of the economic cycle, the condition for the excess of the growth rate of prices over the growth rate of wages must be observed. The consequence is an increase in employment, and labor resources become the only limiting factor for further development. "The acceleration of economic development can also be seen in waves of innovation, the emergence of a mass of new goods and new enterprises, in the rapid growth of capital investment, stock prices and other securities, interest rates, prices and wages. Everyone produces and trades at a profit."

Naturally, this cannot continue indefinitely, and at some point the boom phase ends at the highest point of the economic cycle, called a peak or boom. During this phase, discoveries are made that allow the economy to reach a new level within a given economic cycle, but the introduction of new technologies inevitably leads to an increase in production costs, which results in an increase in the prices of manufactured goods without an increase in the level of wages. This leads to a drop in consumer opportunities. The imbalance between supply and demand is growing. The economic boom turns abruptly into a crisis of the entire economic system, the economic cycle ends, and a new one begins.

The paradox of the recovery phase lies in the fact that after a difficult overcoming of the crisis and its consequences, the economy, within the framework of the economic cycle, through the development of crisis factors, is rapidly moving towards a new crisis.

New features of the phases of economic cycles

Currently, economic cycles and crises in developed market countries have acquired new features and characteristics. The foundation for this was the anti-crisis policy of the state, applied in all countries following the capitalist path of development, and the development of international integration, the socialization of production and capital. Currently, crises in Western countries are different from Russian crises. The following features of the modern economic cycle can be distinguished.

First, crises have become much more frequent, the duration of the cycles has decreased to 5-7 years. At the end of the 19th - the first half of the 20th century, the duration of the cycles was 11–12 years.

Secondly, the nature of the onset of the phases of the cycle has changed. In the past, phases of the cycle, such as a crisis or an upswing, occurred in different countries at different times. Due to this, the destructive power of the cycle was less than at present, when the phases of the cycle occur in most countries at the same time. This is largely due to the fact that, as a result of the increased integration of national economies, a crisis in one country gives rise to a crisis in other countries. There is a kind of chain reaction in the business world.

Thirdly, as a result of the policy of countercyclical regulation, the entire course of the cycle changed. The sharp boundaries disappeared, the phases began to smoothly transition into one another. This policy is also due to the phenomenon of "dropping out" of some phases from the course of the cycle. For example, after a crisis, recovery could immediately begin, bypassing the depression phase (Fig. 2).

Smoothing business cycles - the result of the use of countercyclical regulation

Fourthly, from the end of the 60s. the cyclical crisis is accompanied by growing inflation. Unemployment is becoming chronic and affects new categories of workers. In fact, a new type of crisis economy has emerged - a stagflationary economy.

Fifth, there has been a change in the nature of crises. After a series of cycles with weak crises and a short depression, or in the absence of depression at all, a crisis ensues that covers all spheres and branches of the economy. The force of the crisis is enormous, and all countries are involved in it.

Features of economic development cycles

An important feature of cyclical fluctuations is the difference in fluctuations in the levels of employment and output in industries producing capital goods and durable goods, and industries aimed at producing non-durable goods. The former react to cyclical fluctuations with much greater force than the latter. The reasons for this are as follows.

1. The purchase of new equipment or durable goods can be postponed because they are not essential and the demand for them is sharply reduced.
2. In addition, a small number of firms exist on the market for capital goods at the same time, and such an oligopolistic nature of the market makes it possible for management to quickly reduce the number of employees and the volume of production during recessions.
3. At the same time, prices for their products remain approximately at the pre-crisis level.
4. The level of employment and production volumes in enterprises producing non-durable goods cannot be subject to strong fluctuations, since in the markets for these goods there is more developed competition and firms cannot resist lower prices by reducing the number of employees and the volume of production.

Economic cycles have never been similar to one another, each of them has its own characteristics.

Cycles may be missing some phases, for example, immediately after a crisis, a revival may follow.

Between crises, the business world does not remain calm. The economy can experience large or relatively small downturns and unrest. With regard to economic cycles in this regard, "German researchers have ingrained the term pre-crisis (Vоrkrisе) - a short-term phenomenon, but often heralds the approach of a catastrophe."

There are the following main types of crises:

• cyclical,
• intermediate,
• partial,
• industry,
• structural.

Types of crises in economic cycles

Types of crises	Description
Cyclical crisis	A cyclical crisis is the most profound crisis in its impact. It covers all spheres and branches of the economy. A characteristic feature of this crisis: violation of the existing equilibrium causes the organization of production at a qualitatively higher level. As a result, the next cycle will begin on a qualitatively different economic basis. Outdated equipment is being squeezed out and new equipment is being introduced; production costs are reduced; the structure of production comes in line with the economic requirements of society.
Intermediate crisis	The interim crisis does not cover all sectors of the economy, it is local and is short-lived. It is a timely response to the emerging contradictions and imbalances in the economy. As a result, the recovery or recovery phase may be interrupted for a while. Intermediate crises are not particularly acute; they smooth out contradictions, softening a cyclical crisis, which turns out to be less deep and destructive.
Partial crisis	A partial crisis can occur both during an upswing and during a depression or recovery. The crisis affects only one specific area. For example, the 1997 financial crisis affected the monetary sphere in almost all countries, although it began on the stock exchanges of Southeast Asia.
Industry crisis	The sectoral crisis covers related sectors of the economy. The reasons for its occurrence may be the rise in prices for raw materials and energy carriers, cheap imports, natural aging of industries, the emergence of new ones, and a change in the industry structure.
Structural crisis	A structural crisis usually lasts several economic cycles. The need for a radical change in the structure of production with the use of new technological advances is the main cause of structural crises. Examples of structural crises are the energy, raw materials, food crises of the 70s and 80s.

The paradox of crises is that in this phase of the economic cycle, not only the limit of development is revealed, but also the impetus for the further development of the economy. Such a kind of "stimulant" with destructive properties and consequences, after the onset of which, willy-nilly, it is necessary to create new economic realities.

During the crisis phase of the economic cycle, at first, the motives for reducing production costs are sharply manifested and new opportunities are sought for this. Then there is an awareness of the need to renew production and economic activity on a new technical and technological basis. Having marked the end of one economic cycle, the crisis in this way begins the next.

Crisis and depression are always followed by recovery. As a result of crises, the economy is not completely destroyed, but moves to a qualitatively new level of development.

Types of economic cycles

In economic life, a variety of fluctuations are observed, which are of an objective nature. Of these, there are four types of economic cycles most used by economists.

1. The cycles of renewal of individual elements of capital are 2–4 years.
2. Fixed capital renewal cycles are 7–12 years.
3. The cycles of renovation of parts of buildings and structures are 18–25 years.
4. The cycles associated with demographic processes and agricultural production are 45-50 years.

The cycles of renewal of individual elements of capital are called Kitchin cycles. These are small cycles associated with fluctuations in global gold reserves. Construction cycles are called Blacksmith's cycles, and they are associated with the periodic renewal of dwellings and certain types of production facilities.

The main interest for the business world is Zhuglyar's cycles associated with the renewal of fixed assets. This type of economic cycle has other names: business cycle, industrial or production cycle. When studying economic cycles, economists drew attention to the effect of a larger increase in the production of national income with relatively smaller capital investments. This effect is called acceleration.

The essence of the accelerator lies in the fact that an increase in demand for consumer goods leads to an increasing demand for means of production, and, consequently, for investment. Acceleration generates, on the one hand, instability in the economy, on the other hand, during periods of recovery and recovery, it contributes to the growth of investment, which speeds up the cycle. But in the phases of crisis and depression, due to the existence of an accelerator, the destructive force of the recession increases, because the reduction in investment outstrips the reduction in production.

The accelerator is the ratio of investment to an increase in production or national income and is expressed by the formula:

Where V is an accelerator, I is an investment, D is income or finished goods, t is the corresponding year.

The theory of long-term or "long waves" was developed by the Russian scientist ND Kondratyev in the 1920s. XX century. According to it, in the history of economic development, periods of about fifty years with accelerated or slowed down development can be distinguished. After analyzing the data for 140 years, Kondratyev identified three cycles of economic development with "upward" or "downward" waves.

An upward wave - from the end of the 80s. XVIII century to 1810-1817

A downward wave - from 1810-1817. until the period 1844-1851.

An upward wave - from 1844-1851. until the period 1870-1875.

A downward wave - from 1870-1875. until the period 1890-1896.

An upward wave - from 1890-1896. until the period 1914 -1920.

A downward wave - from 1914 to 1920.

If we continue to follow his theory, then the lowest point of the downward wave will be right in the period of the Great Depression. And then on a serious crisis in the mid-70s. XX century. Kondratyev explained the existence of large cycles by different periods of the functioning of economic goods, the production of which also needs to spend different time, especially on the accumulation of capital for their creation. Another breakthrough in scientific and technological progress marks the beginning of a new cycle. Then, during the upswing stage, the products of this breakthrough are widely introduced.

If we analyze the long Kondratieff waves, we can see the following feature: the industrial cycles occurring during the upward wave are characterized by long and powerful rises and relatively short and weak depressions. At the same time, the industrial cycles of a downward wave have absolutely opposite signs.

Studies of the patterns of long-term economic development made it possible to generalize them in the theory of technological structures.

The technological structure is an integral complex of technologically related industries and the corresponding technical and economic paradigms, the periodic process of successive replacement of which determines the "long-wave" rhythm of modern economic growth.

The chronology of technological orders corresponds to Kondratyev's theory of long waves, according to this, the following types of economic cycles or waves are distinguished:

1. The first wave (1785-1835) - the first technological structure based on the technologies of textile production.
2. The second wave (1830-1890) - the second technological mode, formed on the basis of steam engines, railway and water transport based on them, as well as ferrous metallurgy and machine tool construction.
3. The third wave (1880-1940) - the third technological mode, the core of which was the electric motor and steel production.
4. The fourth wave (1930-1990) - the fourth technological mode based on the internal combustion engine and petrochemical production.
5. The fifth wave (1985-2035 presumably) is the fifth technological mode, formed on the basis of the semiconductor industry and technologies for the production of microelectronic components, as well as information technology and biotechnology.

In the course of every structural crisis of the world economy and every depression that accompanies the process of replacing the dominant technological order, new opportunities for economic success open up. The countries that were the leaders in the previous period are faced with the depreciation of capital and qualifications of those employed in the sectors of the aging technological order, while the countries that have managed to create groundwork in the formation of production and technological systems of the new technological order, are the centers of attraction for capital, released from the aging industries. Each time a change in the dominant technological order is accompanied by serious shifts in the international division of labor, a renewal of the composition of the most prosperous countries.

Cyclicity can be considered as one of the ways of self-regulation of the market economy. Cyclicality is the fundamental basis for the development of not only the market economy, but also the whole society as a whole. If there were no cyclicality, the development of the whole society would have stopped somewhere at the level of the Middle Ages.

Literature

1. Bunkina M.K., Semyonov V.A. Macroeconomics. - M .: Dashkov and K, 2008.
2. Zhuravleva G.P. Economic theory. - M .: INFRA-M, 2011
3. Halperin V. Macroeconomics. - SPb .: School of Economics, 2007
4. Sazhina M.A. Economic theory. - M .: INFRA-M, 2007.
5. Shishkin A.F. Economic theory: In 2 vols. Book. 1. - M .: VLADOS, 2002.
6. Economic theory. / Ed. V.D. Kamaeva. - M .: VLADOS, 2004.
7. Salikhov B.V. Economic theory. - M .: Dashkov and K, 2014.

The business activity of any enterprise or economy of an entire state includes several stages. First there is a rise, then the work reaches its peak. Sooner or later, a recession occurs, which may end in a complete decline. The predetermining stage is the third stage, which precedes the crisis. This stage is called a recession. Let's talk about it in the article.

general information

There are two ways out of the recession. An economic recession can lead, as mentioned above, to a complete decline of the country with all the ensuing consequences. The decline in activity can also be used by the government of the state to find solutions to pressing problems that will allow entering a new growth cycle.

Concept

The state of the economy, which often occurs after an increase in all indicators and has an uncritical nature of a decline in production, is called a recession. During this period, there is a deterioration in key indicators affecting macro indicators. The fact that the economy is in recession is evidenced by:

1. Decrease in GDP indicators.
2. Decrease in the income of the population.
3. Deterioration of investment attractiveness.
4. Decrease in production volumes of industrial enterprises.
5. Decreased consumer activity.

An economy in recession means that a bad period has come for the country. In the course of it, enterprises reduce production turnover, produce fewer goods, citizens receive cut wages, which is why they begin to save.

Causes

An economy in recession may be due to:

1. The collapse of oil and gas prices. Their decrease leads to economic recession in states, where these resources act as a key strategic product.
2. Active growth in the cost of raw materials. It can be triggered by increased consumer demand and hype.
3. Issuing an unacceptable number of high-risk mortgages.
4. Decrease in production volumes in all industries.
5. Decrease in salaries and other incomes of citizens. This entails, accordingly, the deterioration of the population.

What happens in the economy after the recession? A recession inevitably results in a depressive state or a crisis. According to all economic laws, such a state cannot be avoided. However, thanks to the work of analysts and other specialists, the process can be significantly smoothed out. The work of the highest state minds will reduce the negative effect of the recession and reduce the scale of the consequences.

Sphere of distribution

If in any country the economy is in recession, then this can lead to negative consequences not only within this state. Currently, there is active international cooperation. The economic activity of one country may have a close relationship with certain sectors in other states. Thus, a recession in one subject will inevitably lead to a deterioration in the situation in another. This, in turn, can lead to a global world crisis. So, in particular, according to a number of analysts, the EU economy is in deep recession. Within the framework of international relations, during the recession, there is a decrease in indices on the stock exchange. As a result, the national currency of the country in whose economy deteriorates is depreciated. This, in turn, raises the likelihood of non-payment of external debt. When the economy is in recession, it is mainly the businesses operating in the country that are affected. They are faced with the need to reduce production volumes due to inefficient consumption of goods. Late payments for delivered products lead to tax and wage arrears. As a result, enterprises that are not ready for the crisis are declared insolvent (bankrupt). The impact of the recession is also acutely felt by the direct consumers of the goods. The population receives lower wages, people become insolvent, cannot fulfill credit obligations, and fall into debt traps.

Classification

When the economy is in recession, experts analyze the reasons for this situation. Based on it, the type of recession is determined:

Period

A downturn in the economy is recognized if a decrease in production volumes and a deterioration in gross indicators occurs for more than six months and begins to take on a protracted nature. The duration of such a period will directly depend on the reasons that caused this situation. For example, if there is a recession of a political or psychological nature, then the duration of the recession can be reduced by returning the confidence of the population and businessmen. For this, loyal measures are applied in the areas of lending and social security. The situation is different with an unplanned recession. As mentioned above, it is rather difficult to predict such a decline. It depends on negative factors of a global nature. The state in which there is a decline in production cannot influence them. In such a situation, the only thing that analysts can do is to develop measures aimed at minimizing negative effects.

Recession in Russia

The state of the domestic economy directly depends on the indicators of the oil and gas market. The rapid fall in energy prices has a number of negative consequences for the country. First of all, the volume of receipts, which are directed to the budget fund from the sale of strategic products, decreases. begin to fall, followed by a weakening of the ruble. The decline in production causes a decrease in the income of citizens. Consumer activity of the population is deteriorating. With a simultaneous decrease in the income of citizens, prices for services and goods are growing. The economic downturn in the country is also due to external factors - sanctions from a number of countries around the world. Since 2015, relations with various international corporations have been severed, which jeopardized the functioning and development of large enterprises, and had an extremely negative impact on the GDP indicator. As previously noted by experts, this state could last until 2017. However, today the situation may change if the agreement on the freezing of oil production comes into force.

Recession and stagnation

These two concepts have significant differences. The recession is characterized as a moderate economic downturn. At the same time, stagnation is characterized by a complete halt in key strategic sectors. In this period:

Conclusion

During a recession, the process of reformatting the country's economic regime is launched. Specialists develop and implement plans for the further development and re-equipment of the main branches of the national economy. At the same time, stagnation does not provide for any positive dynamics and adaptation to the new reality. As a result, the country is living out the last stage of its cycle, and a deep economic crisis begins.

Hello dear readers! I try to visit my grandmother at least once a month.

She still retained a clarity of mind and an irrepressible interest in events of both local and global scale. Sometimes we can spend hours discussing various news with her.

For example, last week we discussed with her the emerging negative trends in the country's economic development. I want to raise this topic with you, friends. Now I'll tell you about a recession in the economy - what it is and what consequences ordinary citizens can feel on themselves.

What is a recession in the economy, its causes and consequences

A recession is a negative trend in macroeconomics (national economy), often preceding a crisis. This phenomenon is cyclical and is inevitable for any economic system.

Recession (Latin recessus - retreat) is a concept in macroeconomics that denotes a drop in the rate of production over a long period (from six months or more).

A warning!

The process is characterized by zero or negative dynamics of GDP (gross domestic product). The recession entails a decrease in business activity, a slowdown in the pace of economic development. A decrease in GDP is understood as a decrease in the production of goods and a decrease in consumption.

The recession inevitably follows the rise (production boom), which is explained by the cyclical nature of any economic system.

In general, the economic cycle consists of four phases - growth (rise), stagnation (stabilization, lack of any dynamics), recession (fall) and crisis (depression).

The duration of the economic cycle in the modern global world is 10–15 years, which can be traced to the global financial crises - 70s, 90s and the last world crisis of 2008–2009.

Causes

There are several main reasons for the recession, depending on the level of development of the economy.

For commodity economies, the reason for the recession is falling prices for oil, gas and other exported minerals. The price of raw materials falls, the budget receives less income, a deficit appears, which must be somehow compensated.

To compensate, tax rates are increased, and social spending (education, medicine, etc.) is reduced. Such actions further exacerbate the decline in production.

In developed (industrial and post-industrial) countries, the recession manifests itself as a result of a change in the technological order, for example, due to the emergence and development of information technologies.

The technological structure is understood as the level of development of technology and technology, the main directions of the development of scientific and technological progress.

Attention!

It is impossible to influence the indicated reasons for the occurrence of a recession, they arise due to the objective laws of the economy, therefore, a recession at the level of a single national economy will sooner or later occur.

A recession in one state can lead to a recession in other economies, leading to a global crisis.

There are reasons that arise under the influence of market participants. The downturn in the economy can be caused by problems in the banking sector.

For example, commercial banks have issued too many loans that are not paid. Then financial organizations are forced to raise rates, raise funds in the foreign and domestic markets.

In a situation where there are too many such banks, the number of loans issued falls, enterprises therefore cannot borrow money and, in the absence of funds, stabilize or curtail production.

Because of this, unemployment is growing, the population and companies do not pay off loans, banks are tightening rules, the situation is entering a vicious circle and is getting worse.

In the phase of recession, the economy can be plunged by force majeure circumstances, for example, a war or a sharp change in energy prices. The way out of stagnation is possible only with the participation of the state, which will "pour" money into the economy, supporting various industries and stabilizing the exchange rate of the national currency.

Effects

The main consequences of the recession in the economy include the following:

• drop in production volumes;
• collapse of financial markets;
• decrease in the volume of issued loans;
• growth of interest rates on loans;
• rising unemployment;
• decrease in real incomes of the population;
• drop in GDP rates.

The most powerful and critical consequence of the recession is the economic crisis. Due to the decline in production, the need for jobs and the number of workers decreases. This entails a wave of layoffs and an increase in unemployment. People start to consume less, which leads to a decrease in demand for products and an increase in production decline.

The debt of citizens and organizations to banks is increasing, which, in turn, are tightening the procedure for issuing loans.

Advice!

The volume of lending to individuals and legal entities is decreasing, the volume of investments in industry and science is decreasing, scientific and technological development is slowing down. The decline in production is followed by the collapse of the securities market - shares of large industrial enterprises are sharply losing in value.

These events are followed by the depreciation of money - inflation, a further rise in prices and a decline in real incomes of the population. As a result, it leads to dissatisfaction and a decrease in the quality of life.

The state is trying to find funds and increase its external debt. In the absence of sufficient funds, it is necessary to refinance current loans and take new ones.

All of these consequences are reflected in one indicator - a decrease in GDP (gross domestic product), which directly depends on the volume of production within the country.

source: http: //site/delatdelo.com/spravochnik/terminy/chto-takoe-recessiya-v-ekonomike.html

An economic crisis never happens unexpectedly. It is anticipated by a recession. Any economic system, even a progressive one, sooner or later enters the stage of recession. A recession is undesirable, but inevitable.

A recession is a prolonged, initially not very pronounced decline in production and business activity, which over time gets worse and turns into a crisis.

The recession period is characterized by such phenomena as:

• negative dynamics of GDP (both the amount of production and the demand for it are decreasing);
• low business activity;
• lack of progress in the economy.

A recession is a stage following a stage of rapid economic development. Since all economic systems are cyclical, a recession can be considered a natural process.

A warning!

It is known that there are four phases in each economic cycle. Rise and prosperity is inevitably followed by stagnation - the stage of stabilization and stagnation. Stagnation is replaced by recession. The "life cycle" of the system is ending with an economic crisis.

It is useless to try to predict when the recession will start. Nevertheless, the government can prepare the country for it, take a kind of "depreciation" measures that will partially neutralize the negative phenomena accompanying the recession. The crisis will come only if the economic policy of the state turns out to be ineffective.

Causes

The economic downturn does not happen overnight. It is a consequence of many events and processes.

The recession can be caused by global and unexpected changes in the market, which, in turn, are provoked by political changes. Roughly speaking, armed conflicts or surges in gas / oil prices in the world market may be to blame for a slowdown in production and a decrease in demand for any product.

Unfortunately, the Russian economy is obviously dependent on the cost of oil. As soon as the market price of oil decreases, the budget begins to experience underfunding, which ultimately affects the volume of the gross domestic product.

Experts believe that a recession that develops according to this scenario poses the greatest danger to the state, since it cannot be predicted and neutralized in time.

The second possible reason for the recession is a total decrease in production volumes. A serious decline in production was recorded in 2008. It amounted to more than 10%.

Citizens' lack of "spare" money and a decrease in their purchasing power also lead to a recession. True, it is believed that a recession caused by these reasons is completely surmountable and does not have such dire consequences as a recession provoked by wars or market shocks.

Attention!

Another factor in the emergence of a recession is capital outflow and lack of investment. The state's fixed capital is replenished by private enterprises.

If the government is interested in these injections, it must provide the business with such conditions under which it could develop normally within the framework of the national economic system.

The consequences of the recession in the economy

Now let's list the consequences of the recession:

1. financial markets crash;
2. the pace of production slows down;
3. banks restrict lending;
4. interest rates on loans are growing;
5. the number of unemployed is also growing;
6. incomes of the population are decreasing;
7. the volume of GDP is decreasing.

All these phenomena together lead to an economic crisis.

The decline in production results in a decrease in the need for workers' hands. Industrialists fire people, and they can no longer find a new job. Decreased income leads to limited needs. As a consequence, the demand for goods that can be dispensed with decreases. Manufacturing does not experience any incentives to develop.

Individuals and legal entities become debtors to banks. Circumstances force banks to restrict lending. Investment in research projects and industrial enterprises is declining, and the country is beginning to lag behind in terms of science and technology. The stagnation in the manufacturing sector affects the value of shares issued by industrial enterprises. They lose value.

The next stage of the crisis is characterized by rising inflation and the beginning of the devaluation of the national currency. Prices continue to rise and incomes continue to fall. The standard of living of the population is also falling, which leads to massive discontent.

The government is seeking financial assistance from more prosperous countries. External debts of the state are growing. To pay off one loan, you have to take several others.

All these negative phenomena directly affect the volume of GDP. Its decline indicates a deterioration in the economic situation in the country.

It is noteworthy that there is no consensus among economists about the nature of the recession. Some believe that this phenomenon in itself is not critical, while others believe that recession, collapse and depression are synonymous.

source: http: //site/www.temabiz.com/terminy/chto-takoe-recessija.html

Economic recession

What is an economic recession or just a recession? Recession (from Lat. Recessus - retreat) is a decline in production, which is characterized by zero or negative growth of the main macroeconomic indicator - gross domestic product (GDP), lasting for six months or more.

Advice!

A recession is one of the phases of the economic cycle that always follows a period of economic recovery, accompanied by a peak in business activity, and precedes a phase of economic crisis and depression.

It is in this state, in a state of recession, that the economies of the overwhelming majority of countries in the world find themselves at the present time. Thus, economic growth is necessarily replaced by an economic recession.

Depending on the factors that serve as the beginning of the recession phase in the economy, there are three types of recession. In the first case, an economic recession occurs under the influence of unplanned and very profound changes in market conditions.

Among the phenomena that entail such consequences and the recession itself can be attributed to wars or a sharp change in world prices for natural resources, or rather, for oil. The economic recession caused by such phenomena is especially dangerous. Such a recession cannot be foreseen, foreseen, therefore, they have a very painful effect on the country's economy.

The preconditions for the second type of recession are rather political or even psychological in nature. These include declining consumer confidence or growing uncertainty among entrepreneurs or investors.

Such a recession is less harmful to the country's economy, while the current situation is quite easy to correct by lowering interest rates or artificially creating some excitement in the economy.

The third type of recession occurs when the economy loses its equilibrium, and is characterized by a rapid rise in debt and a fall in quotations in the capital and stock markets.

The preconditions for the recent global economic downturn and, accordingly, the recession were an unprecedented rise in commodity prices caused by active consumption, an unreasonably large number of mortgage loans issued to borrowers with a high degree of risk, as well as the rapid development of the activities of speculators who created a whole world of fictitious capital.

A warning!

An economic recession inevitably leads to a crisis, and in the worst case, to a prolonged depression.

It is impossible to avoid this process, but the state, which plays an important role in the process of economic recovery, can significantly shorten the time of the recession and reduce the scale of the consequences of the economic recession in a particular country and the world as a whole.

What is a recession in the economy

A recession is a depressive state of the economy, a phase of recession and inhibition of any constructive activity. A characteristic feature of a recession is an increase in the unemployment rate, the gross national product (GNP) tends to zero, as production declines.

What does the word "recession" mean? Translated from English, recession is “fall, decline”. The word comes from the Latin recessus, which means retreat. In terms of economic cycles, an economic recession is a moment of recession after a boom, followed by a bottom phase, followed by an upturn, after which a peak or boom occurs again.

A variant of a deep recession is called depression. However, the term is completely unpopular these days. Recession is more often talked about. The most famous Great Recession or Great Depression occurred in the United States in 1929.

Since then, as economist M. Rothbard notes, the US government was so afraid of a repetition of something like this that it literally banned the term "depression" and introduced the more common "recession." But over time, more and more recessions began to occur, so instead of them the concepts of recession, deviation, slowdown in production were introduced.

In the global economy, no recession goes unnoticed by other market players. Since in macroeconomics all countries are ultimately tied to a single sales and consumption market. The largest global recession in recent years occurred in 2008-2010.

Starting with the collapse of the US real estate market, the economy of the largest power on the continent of North America pulled the whole world with it. This downturn has led to a reallocation of resources in the markets. People in all countries lost money, the savings of many have sunk into oblivion.

Causes

By definition, the economy develops cyclically. A cycle of contraction (decline, recession) is followed by a cycle of expansion (rise). Due to its cyclical nature, it cannot be said that a recession is an unpredictable or out of the ordinary phenomenon. On the contrary, almost any recession can be predicted.

Attention!

In modern economic theory, there are four types of economic cycles of different duration of stages (rise, peak, recession, depression) - from 2-3 to 50-60 years. In general, it cannot be said that the cycles are so clearly measured, in life one stage can last longer or less, depending on the current world events.

The more named cyclicality can be traced in the model of the French physician and economist of the 19th century K. Juglar. The duration of each phase, including the recession phase, is from 6 to 12 years.

A typical recession is a decline in business activity for a period of three months or more. Since the recession follows the economic peak, the reasons can be attributed to the emergence of new technologies, and increased yields, and changes in prices for raw materials. Force majeure in the form of war, natural disaster or revolution can also trigger a recession.

The recession is growing like an avalanche: in anticipation of a possible recession, consumers begin to buy more or, conversely, save, firms - to produce more or reduce the rate of production, in a word - there are massive fluctuations in business activity.

The market is trying to find a new equilibrium point, as a result, this leads to a decline in production and a decrease in investment activity.

Types

There are three types of recession, depending on the cause.

1. Political recession. It is based on psychological reasons. As a rule, it is connected with the growth of investor uncertainty and doubts of entrepreneurs. Consumer confidence is declining.
2. Debt recession. It is associated with an increase in the country's external debt. It is characterized by falling stock prices and an outflow of funds. It can last for many years.
3. Force majeure recession. It arises from powerful factors such as war or a sharp decline in oil prices.

Each type of recession is surmountable and will pass in any case, the question is how long this economic phase will last.

The first type is easily eliminated by increasing citizens' confidence, for example, by lowering interest rates. The second type may take years to exit and transition from depression to growth. It is associated with rebuilding the economy of a country or an entire region and finding a new equilibrium point.

The third type of recession, on the one hand, is the most unpleasant because of the suddenness of its occurrence, on the other hand, measures must be selected depending on the factors that provoked the economic recession.

Signs

How to understand that the economic recession has already begun? A number of characteristics that indicate the beginning of a recession followed by stagnation:

• rising inflation in the country;
• rising unemployment;
• falling stock indices;
• decrease in production rates;
• capital outflow abroad.

According to another classical definition, the signs of a recession are:

1. the fact that the phase follows a boom;
2. decreased business activity;
3. decline in production.

The above economic indicators are understandable to specialists, but how can ordinary citizens see the impending recession?

By the fact that the prices of well-known goods have crept up, the purchasing power, i.e. how many goods can be bought for the same money as before has dropped. Inflation has risen (you can find out about this from the news), unemployment is growing.

Advice!

The recession period can last from three to ten years. Its duration can be roughly judged by the boom cycle before that. The end of the recession means that the economy has reached the bottom, i.e. the deepest possible minus in relation to typical economic indicators.

The end of the recession, although it leads to a low point - a bottom or depression - means the beginning of economic growth after. The economy will be rebuilt, and a new wave of prosperity and prosperity will begin.

Effects

From the point of view of economic theory, a recession itself is not harmful or malicious. There is no need to fear that it will happen. The opposite expectation that growth will go on constantly is wrong, and leads to the collapse of hopes.

Growth gives way to boom, but they cannot last forever, some economic instruments become imperfect, new technologies and industries appear. And this is good.

A recession is in some way a "cleaning" of the economic organism of a country or a number of states. It helps the economy to rejuvenate, to enter a new stage of development.

For ordinary citizens, the consequences of the recession are:

• loss of jobs;
• decreased purchasing power;
• depreciation of money;
• a decrease in the variety of goods due to a decline in production.

In short, it's time to tighten your belts. However, if we look at this period as a time of getting rid of the unnecessary and restructuring for a more suitable wave of economic growth - to undergo additional training in order to then find a new, higher-paying job, expand career opportunities, review and reduce family expenses, start buying only what what is really needed is that, coming out of the depression, you will not be in the position of a victim beaten by economic squabbles, but will begin to collect the fruits of the success inherent in the recession.

source: http: //site/business-poisk.com/recessiya-v-ekonomike.html

What is a recession: definition, signs and characteristics, types of recession, causes and consequences

A recession (from the Latin recessus - retreat) is a phase of the economic cycle characterized by a moderate, non-critical decline in production in the country; a slowdown in the rate of GDP growth or its decline, accompanied by an increase in unemployment, a decrease in bank lending and a decrease in investment in fixed assets, is also called a recession. A recession, as a rule, is the forerunner of a crisis in the economy.

Why is there a recession?

The reasons for the recession may be:

1. natural development of the economy, when, after strong growth, having exhausted the possibilities for upward movement, the economy needs a respite;
2. wars and civil strife;
3. a sharp change in the prices of commodities, in particular - oil;
4. undermining customer confidence;
5. uncertainty of entrepreneurs and investors;
6. growth of internal and external debts (a possible consequence - default);
7. falling stock prices and capital.

What are they?

Depending on the reasons, there are three types of recession:

Unplanned recession... This type of recession occurs as a result of some unexpected events: wars, a sharp drop in world prices for oil, gas and other minerals. As a result, there is a deficit of financial budgetary funds and a decrease in the level of GDP.

Recession at the political or psychological level... This type of recession arises as a result of increased mistrust among consumers, entrepreneurs and capital holders. It is a consequence of a decrease in purchasing activity, a decrease in investment and a decrease in the value of securities.

Recession as a consequence of the country's external debt... As a result of such debt, there is a decrease in prices and an outflow of funds from the country. This recession is recognized as the most dangerous and can last for many years.

What is it characterized by?

The hallmarks of a recession are:

• A gradual, without sharp jumps, rise in the unemployment rate.
• The volumes of industrial production are falling, but enterprises are functioning, producing products in smaller volumes.
• Falling stock indices.
• Growth in inflation indicators.
• Growth of capital outflow abroad.

In a modern economy, a recession is characterized by an uncritical drop in key indicators over the course of two quarters.

When are you coming?

The economic cycle consists of four phases:

1. growth (rise),
2. stagnation (stabilization, lack of any dynamics),
3. recession (fall)
4. crisis (depression)

The duration of the economic cycle in the current realities is 10-15 years.

What are the consequences of the recession?

The main characteristic consequences of the recession are:

• Falling production volumes in the state.
• The collapse of financial markets.
• Reducing the number and size of loans issued by banks.
• Growth in interest rates on loans.
• Rising unemployment rate.
• Reducing the income of citizens.
• Rising inflation.
• Systemic rise in prices.
• Increase in public debt.
• Falling GDP.

source: https://fortrader.org/birzhevoj-slovar/ekonomicheskie-ponyatiya/recessiya.html

Recession what is it in simple words - causes and significance in the economy

The question of what is a recession in the economy of a state may be of concern to most of its residents who are interested in the situation. Understanding this economic process will make it possible to understand what impact it has on the economy and life of the state and whether it is worth fearing.

Concept

There are many definitions of this economic term, so it is worth familiarizing yourself with the most significant ones. A recession is one of the phases of the economic cycle that is a precursor to the financial crisis.

Attention!

Recession is a term referring to the macroeconomics of the state, it denotes a decline or a tangible reduction in production rates, immediately following the so-called boom, characterized by the indicator of gross domestic product equal to zero or even having a negative value for 6 or more months.

A recession is a moderate, not critical, decline in production indicators, entrepreneurial activity and economic development rates, usually associated with a decline in GDP.
Recession - a slowdown or decline in the growth rate of the gross product.

Recession is one of the phases of the cycle of economic development, which follows after the economic recovery, accompanied by the achievement of the maximum indicator of economic activity. This phase is a precursor to depression or crisis.

A recession is a state of the economy when GDP has been declining for 2 or more quarters, that is, factories begin to reduce their output, stores sell less, and, accordingly, buyers buy less.

Advice!

A recession is a serious reduction in business activity in a country, which is accompanied by a large number of negative consequences (unemployment, falling stock markets, reduced investment, etc.).

A recession is certainly accompanied by three main features:

1. The phase of economic life immediately following an upswing or boom;
2. Accompanied by a decline in economic activity;
3. Leads to a reduction in production.

In many definitions, there is a mention of the fact that a phase of the economic development cycle is called a recession, and the cycle itself consists of 4 main phases:

• Rise.
• Stagnation.
• Recession.
• Economic depression.

The duration of all phases of the economic cycle, as practice shows, is about 10-15 years.

The recession does not at all mean that important indicators have stopped growing. This phase may indicate that the growth rate of the main indicators simply decreased for six months. Usually a recession is a precursor to a crisis, but if all the necessary measures are taken in time, then such consequences can be avoided and the state of affairs can be brought back to normal.

Reasons for the onset

This phase of the economy can occur as a result of a whole list of various factors ranging from the cost of oil products and ending with the number of unemployed in the country. The main reasons for its occurrence are:

The emergence of conditions favorable for the development of a recession due to unplanned internal economic changes. Thus, this state of the economy can be caused by non-economic events in the country, but by political ones, or by changes in prices at the world level for natural resources, and, in particular, for oil.

The Russian economic region is dependent on the prices of this mineral, and in the event of a serious fall in its value, the country's budget does not receive a significant amount, which, in general calculations, leads to a drop in GDP.

Economists argue that such a recession is the most dangerous due to the impossibility of predicting it in order to take early measures to support the economy.

A drop in the pace of industrial production processes, which inevitably entails a recession.
A decrease in the income of the population can provoke the transition of the economy to a recession phase, which leads to a decrease in the ability to buy and worsens the economic situation of the country.

A warning!

This type of recession is not the worst, and economists argue that it can be dealt with quickly and easily by preventing a crisis.

A recession may be the result of an outflow of capital abroad or a reduction in foreign investment and public capital. As a rule, most of the investments are attracted by private entrepreneurs. And in order to avoid such a recession, the government should create such conditions for an entrepreneur to seek to invest in the national economy.

Views

Economists distinguish three main types of recessions, depending on the reasons for its occurrence:

Unplanned recession which came as a result of unexpected changes. Such events can be: the outbreak of war, a sharp decline in the world cost of oil, gas and other minerals. The consequence of such events is a deficit of financial budgetary funds and a decrease in the level of GDP is observed.

It is this type of recession that is most dangerous due to the fact that it is simply impossible to predict it, and it is even more difficult to determine an effective exit method.

Recession at the political or psychological level which has arisen as a result of the increased distrust of the consumer population, entrepreneurs and capital holders. It is a consequence of a decrease in purchasing activity, a decrease in investment and a decrease in the value of securities.

It is enough to overcome this type of economic recession simply by returning consumer confidence, which is done by lowering prices, interest rates and by putting into practice various psychological techniques.

Recession as a consequence of the country's external debt. As a result of such debt, there is a decrease in prices and an outflow of funds from the country. Such a recession is recognized as the most dangerous and can last for many years.

In addition to this causal classification, there is a division of recessions into types depending on the shape of the graph reflecting changes in GDP indicators:

1. V recession. It is characterized by a rather powerful and high-speed decline in GDP, which in such conditions does not reach a depression. The fall in such circumstances is pronounced, the only one and subsequently leads to the return of GDP to the previous level.
2. U recession. In such a situation, the GDP has a fairly long and stable position at a low level without serious movements along the schedule, both up and down, with a rapid recovery in the future.
3. W recession. As a result of this phase of the economy, there is a fairly short-term jump in the graph of GDP growth and development to a high level in the middle of the recession phase. The graph of such a recession resembles several consecutive Type V recessions.
4. L recession. In such a situation, a fairly rapid decline in GDP is observed, which is replaced by a long and rather smooth recovery.

Characteristics of an economy in recession

It is possible to identify that in the country such a stage of the economic process as a recession has already begun by the presence of a list of its obvious factors:

• The unemployment rate is gradually increasing without sharp jumps.
• A clearly noticeable production decline, but at the same time production does not stop, but function, providing citizens with the necessary products, but in a smaller volume.
• Stock indices began to fall.
• Inflation rates are on the rise.
• There is a significant transfer of funds abroad.

At the stage of an economic recession, not all of its signs acquire critical significance. So, for example, a recession is evidenced by an increase in inflation by only 2-3%, at a time when all other indicators of the recession are active, which is evidence of the onset of an economic depression.

What does it lead to?

The main and most obvious consequences of such a period of economic recession include:

1. Reducing production volumes of enterprises in the country.
2. Complete financial collapse of the markets.
3. Decrease in the number and size of loans provided by banks.
4. Increase in loan interest rates.
5. Soaring unemployment rate.
6. Decrease in the income of the population.
7. Rising inflation.
8. Constant price increases.
9. Increase in the country's debt.
10. Falling GDP indicators.

The most serious, dangerous and powerful consequence of the recession is the economic crisis. The decline in production volumes leads to a decrease in the number of jobs and massive layoffs. People lose their jobs, start saving, cutting their expenses, which results in a reduction in demand, which leads to an even greater decrease in production volumes.

Attention!

There is also an increase in the debt of residents and enterprises to banks, which react by tightening the conditions for issuing credit funds. Lending volumes are sharply reduced, and this leads to a reduction in investment in science and industry.

Reduced production leads to a collapse of markets and a decrease in the value of securities, especially the shares of large industrial companies.

Such changes are followed by the depreciation of the country's monetary units, which entails higher prices, a decrease in income levels, an increase in citizen dissatisfaction and a decrease in the quality of life for the population.

The government, trying to rectify the situation, begins to borrow more from its neighbors, and all this leads to a reduction in the very GDP, which is a sign of the onset of a stage of recession that can turn into depression and crisis.

The difference between recession and stagnation

A period of decline or growth is the main difference between recession and stagnation.

The stagnation phase is characterized by:

• Complete economic stagnation lasting for a long time.
• Increase in the number of unemployed.
• A serious decline in the quality of life of citizens.
• Small or almost zero GDP.

If economic stagnation is characterized by high inflation, then it is called stagflation.

The recession is characterized not by a rapid decline, but not by stagnation. And this clearly indicates that the recession and financial stagnation are distinguished by periods of decline in GDP and its consequences for the situation in the country.

To understand what is worse than a recession during a recession or stagnation during stagnation, it is necessary to consider each specific case separately.

The recession does not mean at all that the country is threatened with depression and people should prepare for difficult times. With a competent economic approach to government, all the consequences of the recession can be prevented by bypassing the phase of economic depression.

But, of course, this is not always possible, therefore, before drawing conclusions about the economic situation in the country, one should consider all the economic indicators and reasons for the onset of the recession.

The cyclical nature of economic development consists in the passage of stages of growth, decline, stagnation, growth and decline in activity. The main stage is recession or recession, as the beginning and end of economic cycles... The recession stage covers the entire economy or its individual industry. The stages of recession are characterized by different lengths of periods, coverage and reasons that caused the economic recession.

Signs of an economic downturn

The term "recession" - what is it in simple terms? This is a decline in activity. It is determined by a set of indicators, each of which is a confirmation of a decline in business activity.

Signs of a downturn or recession in the economy are:

• a decrease in product consumption, which causes a decrease in production output;
• job cuts and rising unemployment;
• intensification of inflationary processes;
• outflow of labor and capital abroad;
• deterioration of indicators of the standard of living of the population;
• decrease in gross product indicators;
• a decline in stock market activity and a fall in indices.

When a recession occurs, the development of production slows down, which affects other areas of the economy. The signs are characterized by a gradual decrease in indicators and the duration of the period of deceleration of processes. The onset of a new economic cycle depends on the amount of cash flow, an increase in which has a beneficial effect on the gross domestic product, while a decrease leads to a recession.

It is possible to describe what a recession is in the economy in simple words, based on the understanding of the process by ordinary citizens. The population recognizes the onset of a recession by a number of reliable indicators - a decrease in retail sales, a growing unemployment rate, inflation and changes in interest rates on securities and government bonds.

Recession classification

The intensity of the recession period is understandable when drawing up a graph of changes in the GDP indicator. The most common graphs of fluctuations in gross domestic product of 3 types:

1. V-form, which is characterized by a sudden decline in GDP and a sharp recovery in indicators. The fall has pronounced indicators of the level falling, which does not lead to a crisis.
2. U-trajectories characterized by a long period of a low stable state GDP. At the end of the recession period, intensive growth occurs.
3. L-type, characterized by a rapid decline in performance with a long recovery period without the onset of a recovery stage.

For the formation of indicators, a six-month or longer period is used. The delay in the publication of data on changes in GDP leads to the conclusion about a decrease in indicators after the onset of an economic recession or during the transition to the next stage of development.

Reasons for the emergence of the stage of recession in the economy

The decline in reproduction can be caused by several reasons of internal or external origin. Known reasons for declines in performance include:

1. Decrease in world prices for natural resources - oil, gas and others. The reason is typical for the deceleration of indicators of the economy of the raw material type. The recession is difficult to predict and depends on world markets.
2. Decrease in the level of income of the population... A decrease in the value of wages due to inflationary processes leads to a decrease in consumer demand for products, goods, works, services and, as a consequence, their production.
3. Change in the amount of excise taxes on the import of goods... With a decrease in the taxation of imports, the production of products in the domestic market decreases.
4. Decline in favorable investment conditions... With the outflow of capital abroad, investments in the national economy decrease.

Less common and easily predictable causes of recession are changes in business processes, financial and credit sector, tax system and the introduction of innovative technologies.

Adjustment and elimination of the causes that caused the recession

A number of reasons are subject to affordable regulation and governance. Controlling the key points allows you to restrain the rate of decline, their reflection on enterprises and the population. The conditions depend on the influence of state regulation:

• reduction of inflationary processes;
• an increase in the minimum wage, benefits and incomes of the population as a whole;
• job creation and unemployment reduction;
• material support of socially unprotected strata;
• protection of the industrial sector by reducing the tax burden and securing government orders;
• creation of a favorable investment climate and creation of state programs to attract investment;
• stabilization of exchange rates in relation to the national currency.

Process management prevents the onset of the crisis, which means that the recession has reached the bottom and the most negative stage of the state of the economy. The difficulty of eliminating the causes arises when they are unpredictable., among which the most dangerous for the economy are military actions and lower prices for natural resources. Unpredictable causes are characterized by the difficulty of predicting the onset, minimizing the consequences, and the length of the recession period.

Interactions with other stages of economic development

Taking proactive measures can offset a short-term downturn in economic performance. Otherwise, the economy can move to the next stage. The slowdown in the pace of economic indicators usually occurs after recovery and precedes other stages - effective growth, crisis, or stagnant processes of stagnation.

To explain what a recession and stagnation are in simple language, you can use the main economic indicator - gross domestic product.

1. The recession is characterized by a slow decline in the indicator.
2. With stagnation, GDP has little or no growth.

In the event of the onset of the stage of stagnation, the growth of the gross product may not exceed a few percent for several years.

For economic processes, the presence of a recession stage is more favorable than stagnation. During a recession, there is a change in economic processes and a search for new coping models. The stage of stagnation is a sign of a hopeless management scheme. Stagnation must be distinguished from a crisis, a stage characterized by a sharp decline in the level of GDP.

Consequences of a downturn in economic performance

The recession stage causes economic processes, the slowdown of which is expressed in the following signs:

1. Reducing investment costs. No new investments are made during the downturn.
2. Decrease in long-term lending, increase in rates.
3. Fluctuations and collapse of the financial market.
4. Falling living standards, consumer demand and rising prices.
5. Reduction by enterprises of production capacities and production volumes.

The results of the economic slowdown are observed throughout the country and affect the ability to pay and the standard of living of citizens. The interconnection of the economy leads to a reflection of the recession in one country on the transformation of the economic processes of other states.