Business Dictionary defines a recession as a period of contraction in the gross domestic product (GDP) for six months or longer, during which retail sales fall, wages stagnate and unemployment rises. EPI adds that recessions also impact education, job opportunities and the formation of new businesses.Continue Reading
Towers Watson indicates that recessions are generally marked by mass layoffs as companies struggle to retain all their staff. The workers who remain are less likely to voluntarily quit their jobs, and it is harder for young workers entering the workforce to find jobs.
Big businesses experience a decline in sales revenues and start to cut costs, including the purchase of new equipment, research and development, and advertising. These efforts to cut costs, in turn, affect other businesses, according to Investopedia.
During a recession, companies may see a decline in their stock prices and shareholders' dividends. As a result of declining profits, companies become less able to repay their debts on time, which can lead to their credit ratings being damaged. Companies that are consistently unable to service their debts declare bankruptcy and go out of business. Smaller businesses are especially susceptible to bankruptcy during recessions, since they typically don't have large cash reserves, notes Investopedia.Learn more about Economics
Technology has affected the economy through direct job creation, contribution to GDP growth, creation of new services and industries, workforce transformation and business innovation. The use of technology has been linked to marketplace transformation, improved living standards and more robust international trade. Technology has revolutionized virtually every industry in the economy.Full Answer >
To calculate the real gross domestic product, or GDP, per capita, which reflects the total output of the country, the gross domestic product should be divided by the population of the country. GDP can be calculated for any size of population, but it is often used for populations of countries.Full Answer >
The difference between the potential and actual gross domestic product (GDP) is known as the output gap, or GDP gap, according to the Economic Policy Institute. The potential GDP is a country's maximum, ideal production with high employment across all sectors of the economy while maintaining currency and price stability. Real GDP is the actual measured economic output for a country over a given interval.Full Answer >
According to the BusinessDictionary website, double counting occurs when the costs of intermediate goods that are used for producing a final product are included in the GDP count. To avoid double counting, these intermediate goods costs are ignored, with the GDP total including only the final price of the goods.Full Answer >