Demand shocks occur when the demand for products drops as people stop earning money. A tactic to fix this is to stimulate the economy. In 2008, Australia gave households cash and encouraged them to spend to jumpstart the economy.
In 2020, the problem is also a lack of goods because businesses stopped working. If you give people more money, businesses will increase their prices, which will lead to a rise in inflation.
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Recessions are part of the fabric of a dynamic economy. The average investor fears recessions because they mean lower home prices, lower stock prices, and less or no work.
Several things ca...
Recessions are really "depressions," but the term "depression" seems too terrifying. After the Great Depression, economists began to use the word "recession" instead.
The 2007-09 recession involved a financial crisis, high unemployment, and falling prices, and was named the Great Recession. Our current recession is still without a name.
A standard measurement for a recession is two-quarters of consecutive GDP contraction. But the official arbiter of recessions and recoveries, the Business Cycle Dating Committee of the National Bureau of Economic Research (NBER), prefers domestic production and employment indicators instead. Other signs of the recession include:
The economy shut down almost overnight. But reopening it will not happen the same way. It may take months and possibly years to fully open, even under the most optimistic estimates.
The proposed three-phase plan will allow many businesses to open in the first phase.
Schools and daycare centers can open in the next phase. But that means millions of working parents could be asked to return to their jobs before they have someone to take care of their children.
In the early phases of reopening, businesses could be required to operate at a reduced capacity.
Offices might operate in rotating shifts, but other businesses could have a harder time. Restaurants may have tight profit margins even in better times. Operating at half capacity may mean working at a loss.
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