Home | Forums MBA Managerial Economics Discussion Forum Reply To: MBA Managerial Economics Discussion Forum

  • Yaamini Renganathan

    Member
    December 26, 2021 at 12:21 am

    During a recession, the rate of unemployment usually rises rapidly and remains high. Since corporations confront rising expenses and stagnant or declining income, they begin laying people off as a cost-cutting measure to save money. As the recession deepens, the number of jobless employees across a wide range of sectors rises at the same time, and the average duration of unemployment for workers rises as well.
    During a recession, there are two or more consecutive quarters of negative economic growth, as measured by GDP or other indices of macroeconomic performance, including unemployment. The official dates of recessions include unemployment as part of the definition of what defines a recession, therefore the link between recession and unemployment is a question of semantics. Job opportunities are rare during a recession since many firms are laying off workers at the same time.

    A major tragedy of economic downturns is that the adjustment of labor markets is sometimes impeded by government actions, which may deepen and extend unemployment. Such policy responses to recessions are essential and vital to debate even if this is not cyclical unemployment in the strictest sense. This may occur in a variety of ways, but fiscal and monetary policies that interfere with industrial structure adjustment are the most crucial. Government intervention with labor market incentives is also a factor. Government policies to safeguard banks and large corporations may actually damage the economy rather than help it.