Why in news
The benchmark S&P BSE Sensex slumped almost 3% amid a deepening global sell-off, precipitated by fears that the U.S. economy may tip into a recession
Indian rupee fell to its all-time low of 84.09 against the U.S. dollar, weakening by 37 paise in the session as the equity sell-off and foreign fund outflows weighed on sentiment in the currency
What is recession
A recession typically involves the overall output in an economy contracting for at least two consecutive quarters, along with job losses and reduction in overall demand.
The US National Bureau of Economic Research (NBER) decides whether the economy is in a recession based on its assessment of the depth, diffusion, and duration of the impact on the economy.
Sometimes, the duration may not be long but the decline could be very severe — as it happened in the wake of the Covid-19 pandemic
Or, the depth and diffusion may be relatively less but the downturn may last long — as is expected in the United Kingdom in the wake of the economic crisis
Types of recession
Boom and bust recession
Balance-sheet recession
Depression
Supply side shocks
Recession: Causes
An unexpected economic shock
Uncontrolled Inflation
Excessive deflation
Lack of consumer confidence in economy
Recession: Impact
Unemployment
Drop out and shutting down of business
Drop in government revenue
Weakening of currencies
Global supply chain disruptions
Decrease in Investment
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