Article 1:
Summary:
The article by Alan Rapperport analysis the effect of the economic recession and the role of government in a recession, according to this article the gross domestic production in the US was expected to decline by 1.5% in the 2nd quarter this year, however official figures show that the GDP level declined by only 1%. In this quarter the level of GDP declined as a result of the decline in customer spending by 1%, this decline was as a result of the high levels of unemployment in the economy. (Alan Rapperport (2009))
The current recession is considered the longest since 1947 and due to increased government spending the budget deficits this year is expected to reach $1,600 billion. Government spending in the 2nd quarter increased by 11% and this spending affected the car industry and the housing market. Inventory also declined in this quarter and this reduced the GDP by 1.39%, however when aggregate demand increases the inventory level is also expected to increase. According to the congress budget office the 3rd and 4th quarter level of GDP is expected to improve due to increased government spending and a 1.6% growth rate is expected. However the recovery process is expected to take longer given that those consumers are faced with high unemployment rate, high debt levels and restricted borrowing. (Alan Rapperport (2009)) (continue reading…)
