Who Benefits In Recession - Essay Example

That would take care of the other factors in the economy and that would help to define the recession. (Brainard & Perry, 2001, Pp. 176-177). The recession has a severe effect on the economy as seen by the events during the recession. As the GDP decreases the country attracts less investment. There is a dearth of investment during the recession. There is decreased demand in the economy and the companies find it hard to make a commendable business. As a result, there is stock of unused goods and machinery.

The consumption function of the economy decreases and this has a multiplier effect in the economy. As there is not a proper utilization of resources, there is a relatively higher production costs. As the production costs are high, therefore, it has an effect on the consumption. Though there is a rise in the production costs, the change in the wages is not uniform. In some cases the workers are thrown out of their jobs and the in the other5 cases there is a decrease in the wages of the labor. In the case of the productivity, the volume of the production decreases.

Therefore, the production of the companies decrease and the companies are on the verge of the extinction. From the typical recession scenario seen from the history of the world, it has been noted that the conditions of the economy needs some time to change. The economic conditions of the country are severe and the companies get closed. This effects the employment in the economy and the production. Most of the employees loose their jobs and experience a pay cut. This makes it hard for the survival of the people in the economy.

The conditions are improved in the economy by the intervention strategies of the Government. The condition of the economy during the recession needs some thoughts put in by the Government and the economy needs financial support. In the modern world, most of the countries have minimum intervention strategies by the Government. But during the