Submitted by: Submitted by ondiekstephen
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Category: Business and Industry
Date Submitted: 08/30/2012 02:38 AM
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A business cycle is a type of fluctuation that occurs in the whole economic activity. The business cycle dating committee of the National Bureau of Economic Research and realized that there was an occurrence of a trough in the U.S Economy in June 2009. The trough was an ending mark that started in December 2007 and a start of an expansion. This recession was the longest ever since it took 18 months after the Second World War. Initially there was a longest Postwar recessions of 1973-75 and 1981-82 which took 16 months. It was very difficult for the committee to determine the trough that occurred in June 2009 because this month was favorable and it had gone back to its normal capacity operations. The committee found out that after the end of recession, the recovery phase began in that very month.
A recession refers to a period when there is a decrease in economic activities of an economy which lasts for some months and this is evident in Gross Domestic Product, employment, real income, whole-sale retail sales and industrial production. The trough is usually the ending point of the declining phase and the beginning point of the rising phase in the business cycle. Revision in the National income and product accounts was to determine decisions that would be made by the committee in August 27, 2010 basing on the major indicators of economic activity: real GDI and real GDP. The committee noted that An average of 3.1 % of real GDI and real GDP remained in the second quarter of 2009 compared to a 1.3% in the earlier peak. Identification of the trough date was based on the basic indicators of economic activities. The real GDI and GDP was only available quarterly and could only be issued by the bureau of Economic Affairs of the U.S DEPARTMENT OF Commerce.
Cause of economic recessions in 2009
Creation of housing bubble
The price of U.S houses increased between 1998 and 2005. The support for the availability of a bubble came from the...