QUESTION NO: 04
SELECT AN INDUSTRY AND DISCUSS THE EFFECTS A RECESSION
WILL HAVE ON IT?
RECESSION:
The other name of recession is called contraction. In the phase of prosperity, the producers
work day and night to produce more goods to maximize their profits. Even the production of
goods becomes much higher than the market demand. That is why, they start closing down
the production units to sell their over production and the labor becomes jobless. This further
decreases the demand for goods because purchasing power of people decreases owing to
unemployment. Every entrepreneur decreases the prices to sell his goods as soon as possible.
As a result, profits start falling; rather there are chances of loss. Consequently investment
falls down and the producers do not set up new factories rather working factories also
decreases production. The banks also demand the payment of their debts and the investment
further contracts. The periods in which an economy comes back from prosperity to slump is
called Recession.
A recession is general downturn in any economy. A recession by the following factors:
1. High employment
