Economic Impacts Child Marriage Womens Decision Making Selected Other Impacts Brief

A recession is a period when the economy shrinks, businesses and consumers stop spending, and many people lose their jobs. How could anything so awful actually be good for the economy? How can a recession help the economy? We know recessions are scary, but how can they be a good thing? After all, they feel horrible while they’re happening. Let’s take a closer look at how they ultimately help the economy. Read on for answers to these questions about recessions.

How does a Recession Help the Economy?

During a recession, businesses have less demand for their products and services. This means there’s less need for workers to make these products or provide these services. In response, businesses will typically lay off some of their employees.

If businesses kept on hiring and kept on producing as much as they did during the boom, the economy would eventually become too saturated. This results to surplus of supply and not having enough demand.

Recession Benefits for Individuals

A recession is not only a time of less production and fewer jobs, but a time of lower prices as well. When less is being produced, there is less supply and higher demand. And when there is less demand, prices naturally fall. A recession benefits consumers because they can buy more with their money. This is because prices fall during a recession. And because less is being produced, there is less supply to drive prices up.