Recession

Recession in last decade is considered as the worst crisis after the great depression of 1930s. It emerged out of USA. Various important aspects related to this recession are as follows: Causes of recent recession Credit creation Interest rates were less for a long time. The resulting malinvestment and over consumption of investors and consumers precipitated the financial crisis. Oil prices One of the major reasons to cause recession that was vital element in declining economy of USA.

Effects of recent recession Unemployment The unemployment rate raised from 4.9% to 10.1%. The huge surge in labor supply led to decrease in wages and consequently recession. Countries going down The severely affected countries were US, UK, Russia, Argentina etc. The least affected countries were China, Australia, Japan and India.

Response by Government

Various government agencies have committed or spent trillions of dollars in

loans, asset purchases, guarantees, and direct spending. Regulatory proposals were presented that comprised consumer protection, executive pay, bank financial cushions or capital requirements, expanded regulation of the shadow banking system and derivatives, and enhanced authority for the Federal Reserve