Whether it is a newspaper, on a news channel on television, or some news bulletin on the radio, everywhere people are talking about recession, the methods to recover from the recessionary situation and so on. In short, the economic phenomenon ‘recession’ has been gathering huge attention from people across the world for quite a long time. .
Technically speaking, the word ‘recession’ refers to a decline in gross domestic product or GDP of a country over a period of two successive quarters. This kind of definition, is, however, not capable enough of providing a clear idea regarding the recession. To understand recession, the first one needs to have a clear idea regarding what is actually meant by G.D.P or gross domestic product. Gross domestic product of a particular year can be defined as the value of all the final goods are services that are produced in that given year. In the calculation of G.D.P. only final goods and services are taken into account. Final goods and services actually refer to those goods and services that are never transformed into some other products in later periods. During the calculation of G.D.P, these final goods and services are evaluated at their market price. Now the technical definition of ‘recession’ can be illustrated as follows: in an economy, in a given year if the total market value of all the final goods and services produced in that country declines for two successive quarters, then the economic state of that country will be referred to as a state of recession. In a simple way, it can be described as a period of declined economic activity.
Recession is visible through fall in real growth in GDP, fall in real personal income, fall in employment, reduction in industrial production as well as wholesale retail sales. (Froyen)
According to the surveys of the National Bureau of Economic Research, the economy of the most dominating and powerful country U.S.A. has experienced many recessionary phases since 1945. From 1945 to 2007, most of the recessions lasted around 10 months on average. . .