Core Theories on Economics Related To Economic Slowdown Essay

Core Theories on Economics Related To Economic Slowdown - Essay ExampleThe intention of this study is economic slowdown as the condition in which the gross domestic product growth tends to slow down but it does not turn down. One of the ways of expression at the slowdown in the saving is through gauging the downward revisions in the Gross Domestic Product (GDP). Economic slowdown can also be identified as the difference obtained in the growth rate between two consecutive years of any particular country. An economic downturn demonstrates that the thrift of a particular country is entering into recession. The result in which the country suffers from prejudicial economic growths, declining outputs and increasing unemployment is termed as recession. According to the official definition of recession, when the economy suffers from off-putting economic growth for two consecutive years then it is said to be recession. Prior to defining the economic downturn, it is significant to compre hend the of import characteristics of economic downturn. A few of the characteristics of economic downturn are rising unemployment, rising additional capacity, low confidence and falling investment, increasing political science borrowing, negative or too low economic growth. Certain problems related to recession or economic slowdowns are evident when there is decline in productivity. In such scenario, the production in the economy tends to be reduced which results to slighter real GDP and lower average income. Furthermore, the wage rates may attire either too slowly or may not rise at all. Unemployment is another problem related to economic downturn. (Pettinger, 2011). Since the production is too less during the times of economic slowdown, the look at for the labor also declines thus leading to unemployment. During the times of economic slowdown, the finance of the government tends to worsen. People are not confident of paying much taxes and their spending on the unemployment b enefits tends to rise (Pettinger, 2011). This leads to rise in government borrowing and in the rate of interest. With the increase in the bond yields, government is forced to reduce budget deficits via cutting the spending and tax rise. This worsens the recession and it becomes difficult for the economy to come out of it. It is often found that throughout the period of economic slowdown, there is devaluation in the exchange rates because during such period people tend to expect lower interest rates and therefore the demand for the