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Recession,
we need to understand the
market
economy;
A] TWO
STAGES OF MARKET ECONOMY
Producer Price
Consumer Price
Usually, we think;
Demand = Quantity
But, here Demand = Price;
This is because,
Price decides the Quantity of Sal
Competitive Price = More Dema
In competitive Price = Less Dem
C] What is Recession?
C] What is Recession?
GDP is a good indicator of economy; Other
indicators could be;
-Unemployment Rate
-Consumption Rate
-Actual Personal Income
-Etc..
If GDP is growing, then market is growing
due to increased demand;
C] What is Recession?
GDP is a good indicator of economy; Other
indicators could be;
-Unemployment Rate
-Consumption Rate
-Actual Personal Income
-Etc..
If GDP is growing, then market is growing
due to increased demand;
Note: If the recession continues for next
quarter, (>6 months) then we go through
DEPRESSION Economy;
C] What is Recession?
There is a joke that economists quote to
explain the
Difference between Recession &
RECESSION
Depression
= WHEN YOUR NEIGHBOR LOSES HIS JOB
DEPRESSION
= WHEN YOU LOSE YOUR JOB
E1] OVER
PRODUCTION
E2] LOW
CONFIDENCE
LEVEL
E1] OVER
PRODUCTION
PSEUDO DEMAND
ACTUAL NEED WAS
NOT THERE;
WRONG PROJECTIONS
COMPANIES
PRODUCED
MORE
A situation in which
the
supply exceeds the
nations
ability to consume
what has
been produced;
Consumers
arenot
fearing
they
Producers do
stockthat
materia
lose
theirtheir
jobs;productions,
So, they have
less
reduce
gets
i
confidence
to spend
money
and b
cost reduction
activities,
worrie
goods;
This will result
the profitability,
etc in reducti
in demand in the market; Consum
start saving money instead of sp
money; This is a downward spir
the economy;
CONTINUED
IN NEXT SLIDE
Low or No income to
spend and buy goods
So, you can see how the hit on Airline and Hote
industries can affect
in the end;
Un-related ind
Producers;
Consumers;
Can decide to
buy or not;
Both Producers and Consumers are free to act; Not a forced actio
Monetary Policies
(By RBI)
More money
available for
spending
Demand picks
up; Market
can recover;
More money
1] Reduce reserve
available for bank
ratio
to give loans
Demand picks
up; Market
Each bank has to keep a high % of their assets in
can recover;
RBI (Reserve Bank of India). These assets do not
What is Reserve Ratio?
More money
1] Reduce reserve
available for bank
ratio
to give loans
2] Lower the
interest rates
Individuals take
more loan
Demand picks
up; Market
can recover;
More money
1] Reduce reserve
available for bank
ratio
to give loans
2] Lower the
interest rates
Individuals take
more loan
It becomes an
income to Govt.
to inject money
into the market
Demand picks
up; Market
can recover;
I] WOW!!!!!!!!
I] WOW!!!!!!!!
GDP Growth
Most of the developing Currently,
Rate Down; But,
Economies like China, Slow Down
Stage; Not yet Still expected to be
India;
in Recession Around 6% in India
GDP Growth
Rate Negative;