Question

Causes of economic recession and recovery

Answer 1

mm... Causes of economic recession could be the loss of consumer confidence, high interest rates, a stock market crash, and asset bubbles bursting. These can cause the economy to slow down and can lead to recession if unchecked.

Step-by-step explanation:

the recovery part is through expansion, peak, contraction, and trough.

sorry if this doesnt help!♡

Answer 2

There are many potential causes of economic recession, including:

1. Tightening of credit markets: When banks and other lenders become more cautious about lending money, it can become harder for businesses and individuals to access credit. This can lead to a slowdown in economic activity and a contraction in GDP.

2. Bursting of asset bubbles: When the value of assets such as stocks, real estate, or commodities becomes inflated beyond their true value, it can lead to a sudden collapse in prices. This can cause widespread economic damage, especially if many people have invested heavily in the affected assets.

3. Decline in consumer spending: If consumers become more cautious about spending money, it can lead to a reduction in demand for goods and services. This can cause businesses to reduce production, cut jobs, and contribute to a recession.

4. External shocks: Economic recessions can also be caused by external events, such as wars, natural disasters, or pandemics.

Recovery from a recession can occur through a variety of mechanisms, including:

1. Fiscal policy: Governments can use fiscal policy tools such as increased government spending and tax cuts to stimulate economic growth and job creation.

2. Monetary policy: Central banks can use monetary policy tools such as lowering interest rates and increasing the money supply to stimulate borrowing and spending.

3. Structural reforms: Governments can implement structural reforms such as deregulation, labor market reforms, and investment in infrastructure to encourage long-term economic growth.

4. External factors: Economic recovery can also be driven by external factors such as a rebound in global demand for goods and services, or a rise in commodity prices.