Learning Team Deliverable Week 4 Essay

TA-4D) Recessions seem to show up every so a lot and create economic hardship. One might think that macroeconomic policymakers could tame the stock cycle and put through policies that would end recessions. Are recessions a necessary fact of macroeconomic living?If non, what would it take to eliminate them? If they ar unavoidable, what types of commercial enterprise wad benefit from them? How would a recession affect your firm?Economists identify business fluctuations in the economy by measuring the Gross Domestic Product (GDP) output. This fluctuation of output is called the business cycle. McConnell (2009) states, numerous economist prefer to talk of business fluctuations rather than cycles be bugger off cycles imply regularity while fluctuations do not (p. 984).The business cycle is distinguished by four phases Peak, Recession, Trough, and Expansion, always starting with the peak (McConnell, 2009). The motion of the business cycle propels with alternating rises and declin es in the take of economic activity with each portion varying on duration and intensity.At the peak of the cycle, business activity has reached a temporary maximum. Here the economy is at full employment and the real output is close to the economys capacity.With a price level rise during this phase, either resources or consumers will eventually dwindle causing a decrease in output. A decline in total output, income, and employment of the business cycle is called the recession period (McConnell, 2009). During a recession the GDP will decrease, manifesting a notable increase in unemployment which leads to economic hardships in umpteen sectors of the economy.A macroeconomic policymaker could try to keep business activity at an equilibrium by reinforcing a policy framework for businesses to abide by. Examples to the policy framework could include pricing rules, along with having resources available to companies for production. whatsoever the details of this policy framework, one stil l must consider that an expansion leads to recession, and vice versa. It is evitable. So yes, recessions are a necessary fact of macroeconomic life.Consider a farmer with crops in his field and his unfitness to stop a storm that wipes out his crop, or a business executive with the best business plan who is vulnerable to the fluctuations of the stock market. These examples reinforce that recessions are a necessary fact of macroeconomic life and they are unavoidable.The types of businesses that could benefit from a recession are companies providing nondurable goods or business with a combination of some(prenominal) durable and nondurable goods with the ability to bridge the output until the recession moves back into motion with an expansion. Consumers movenot postpone the buying of nondurables much(prenominal) as food therefore recessions only slightly snip nondurable output.The last recession hurt the in high spirits end retail optical business mode postly because they carry suc h an expensive product to let with sales dropped dramatically until wad were comfortable with the economic situation again. Our attach to had to compensate for this decline by laying off over half of the corporate staff, between the periods of October of 2008 through April of 2009.We now operate with half the amount of employees and even though the economy has started to come back the company will not hold any new staff. Other ways the company compensated was forgoing any rate increases for everyone until 2010. Recessions decidedly hurt companies that sell durable goods however, it also forces companies to look how to trim the business and cut costs during the condemnation of a recession.(TA-4C) Deflation has serious economic effects deflation is the generateing of prices, according to National Center for Policy Analysis, 2001) deflation can increase interest rates so the market rate minus the change in price. For example, if the prices fall six percent per year and the nomi nal interest rate is four percent, the real interest rate will calculate at ten percent.According to National Center for Policy Analysis, 2001) Deflation is negative price inflation or a simultaneous fall in a broad range of prices for goods and work. Deflation will raise current wages and can lead to major layoffs as employers try to reduce costs. Many organizations will need to reduce labor coast and because it is the quickest way to free cash flow layoffs will be the first to be considered.Deflation will also influence consumer spending because people become more conscious when spending creating a decrease in sales for businesses. One enough used method for reducing deflation is influencing the interest rates. The Federal Reserve influences interest rates to help cause the supply of money to change and create movement. When the supply of money changes it reduces major drops in inflation and deflation (Bernanke, 2002).Deflation can affect numerous businesses, for example Citicor p, although Citicorp is a large financial institution, a large number of the companys employees are employed in the call centers.The call centers provide customer receipts for consultation cards. With deflation people are more conscious with spending and are more focused on paying(a) down debt, without the consumer spending on his or her credit cards Citicorp is forced to reduce customer service jobs.ReferencesHarvey, J. (2011). Why do recessions happen? A practical guide to the business cycle. Retrieved from http//www.forbes.com/sites/johntharvey/2011/04/18/why-do-recessions-happen-a- practical-guide-to-the-business-cycle/ on October 18, 2013. McConnell, C. (2009). Economics, principles, problems, and policies (18th ed.). sweet York McGraw-Hill Company.National Center for Policy Analysis. (2001). Economic Problems of Deflation.Retrieved from http//www.ncpa.org/sub/dpd/index.php?Article_ID=7473 on October 20, 2013.Bernanke, G. B. S. (2002). Deflation Making Sure It Doesnt chance Here. The FederalReserve Board. Retrieved fromhttp//www.federalreserve.gov/boarddocs/speeches/2002/20021121/default.htmon October 20, 2013.