What are the causes of a recession? What happens to a county's output and prices after a recession has ended?
Causes of a recession can vary, but some common factors include:
1. Decrease in consumer spending: When people are not spending money, businesses suffer and may have to reduce their workforce, leading to further decreases in spending.
2. High inflation rates: High inflation can lower purchasing power and decrease demand for goods and services, leading to a decrease in economic activity.
3. Tight monetary policy: Central banks may increase interest rates to combat inflation, which can lead to a decrease in borrowing and investment.
4. Financial crises: Events such as stock market crashes or banking crises can lead to a loss of confidence in the economy and decrease in economic activity.
After a recession has ended, a country's output and prices typically begin to recover. Businesses start to invest and hire again, leading to an increase in output. Prices may also start to rise as demand for goods and services increases. However, the recovery period can vary in length and strength depending on the severity of the recession and other economic factors.