Copy of recession PPT

8/7/2019 Copy of recession PPT

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Simple tips for employees during recession times

Recession

and ourRole


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Before understanding the Recession,we need to understand

the market economy.There are two stages of marketeconomy,

1. Growing market economy

2. Declining market economy

And two factors of market,

1. Demand

2. Supply

Introduction_Market Economy


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Growing market economy


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Declining market economy


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Two factors of market_Demand and Supply

PRODUCERalways wants his demand of his product to be HIGH cost

CONSUMERalways wants his buying cost to be LOW

Demand :Actual demand is the price at which consumer is ready tobuy,and Producer is ready to sell.Here it is not as the quantity.

Because,

Price decides the Quantity of Sales;Competitive Price = More Demand;

In-competitive Price = Less Demand

Producer's Demand

Consumer Price


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What is Recession?

In economics, the term recession generally describes the reductionof a country's Gross Domestic Product (GDP) for at least two

quarters.

Recession


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Definition : The monetary value of all the finished goods and

services produced within a country's borders in a specific timeperiod, GDP is usually calculated on an annual basis. It

includes all of private and public consumption, government

outlays, investments and exports less imports that occur

within a defined territory.

GDP = C + G + I + NX

1. "C" is equal to all private consumption, or consumer spending, ina nation's economy.

2. "G" is the sum of government spending.3. "I" is the sum of all the country's businesses spending on capital.

4. "NX" is the nation's total net exports, calculated as total exportsminus total imports. (NX = Exports - Imports)

What is GDP? Gross Domestic Product


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In 2008-Q3 Indias GDP slump down to 5.3%

Indias GDP


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Recession and Depression

There is a joke that economists quote to explain theDifference between Recession & Depression

RECESSION= WHEN YOUR NEIGHBOR LOSES HIS JOB

DEPRESSIONWHEN YOU LOSE YOUR JOB


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Causes of Recessions

1. Currency crises Frequent change in international currency rate.

2. Energy crisis Usually refers to the shortage of oil and additionally to

electricity or other natural resources of energy.

3. War Ruins the country property.Refers and relate to economy.

4. Under consumption Insufficient consumer demand relative to the amount

produced

5. Overproduction Excess of production over consumption.

6. Financial crisis Some financial institutions or assets suddenly lose a large

part of their value.


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Effects of Recessions

1. Credit crunches Banks may suddenly stop or slow lending activity.

2. Bankruptcies Bankruptcy typically involve concealment of assets,

concealment or destruction of documents, conflicts of interest, fraud

claims and false statements or declarations.

3. Deflation Persistent decrease in the general price level of goods and

services.

4. Foreclosures Legal and professional proceeding in which a lien holder,

usually a lender, obtains a court order of redemption.

5. Unemployment when a person is available to work and currently seeking

work, but the person is without work.


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Current Markets condition

o We all know that markets have slumped.

o We read about job-loses in news papers.

o People talk about atleast 24 months of recession.

o Early entrants are not getting jobs.

o Companies are closing.

o Sales are not picking up.

o Suddenly cash has evaporated from the market.

o Profitability is seriously hit.


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How to come out of Recession?

It is unhealthy for any nation to be in Recession;

So, Government will take certain countermeasures toeliminate or reduce the effect of recession for

turnaround;

Important Point : Today, it is a market Economy,*Producers can produce and can sell at their prices and

Consumers;can decide to buy or not

Here both Producers and consumers are free toact without forced action.


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Government Plans against the Recession?

Hence, Government does not have direct control on

Producers & the Consumers behavior; But, they caninfluence millions of Producers &Consumers with

Governments policies;

Government has 2 plans

Fiscal Policies(By Govt.)

Monetary Policies(By RBI)

Government influences the

economy bychanging how

it (Government) spends

and collects money

RBI manipulates

theavailablesupply of

moneyin thecountry


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Govt control through RBI

Repo Rate:Repo rate is the rate at which the banks can borrow

money from a central bank of the country in order to avoidshortage of funds. It is also a financial & economic tool in the

hands of government to control the availability of money

supply in the market by altering the repo rate from time to

time.Current repo rate is 5.0 %.

Reverse Repo Rate :Reverse Repo rate is the rate at whichReserve Bank of India (RBI) borrows money from banks. Banks

are always happy to lend money to RBI since their money are

in safe hands with a good interest. Current rate is 3.0 %.

CRR :Cash Reserve Ratio is the amount of money that the bankshave to necessarily keep with the RBI.The RBI pays the interest

on the amount kept with it. Current CRR rate is 5.0 %.


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Govt_Fiscal Policies

See the flow :

Government influences theeconomy bychanginghow Government spendsand collects money

1] Taxcuts for

businesses orforindividuals

More money

available forspending

Demand picks

up; Market

can recover;

2] Morespending

by Govt. to

create jobs

Individuals get

salaryand spend

money

3] Automatic

fiscalpolicy;

Unemployment

Insurance

Someincome to

unemployed

people to spend

FiscalPolicies


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Govt_Monetary Policies

See the flow :

1] Reduce CRR

for banks

More money

available for bank

to giveloansDemand picks

up; Marketcan recover;

Government manipulates theavailablesupply

of moneyin thecountry

Monetary

Policies

2] Lower the

Repo & Reserve

repo rates`

Individuals take

moreloan


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What about India in global market crises

Most of the developing

economieslike China,

India;

Currently,

Slow Down

Stage; Not yet

in Recession

Most of the developed

economieslike US,

Japan, Germany,etc

Currently,

in Recession

GDP Growth

Rate Down; But,

Stillexpected to be

Around 6% in India

GDP Growth

Rate Negative;


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Dont worry

What goes down will always go up, Markets will

rebound these tips will prepare you to be awinner !!

HOPING THIS TIME RECESSION VANISHES SOON SO THAT

INDIA GETS BACK TO ITS STRONGERGDP GROWTH RATE OF 8% TO 10% .


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Documents

Copy of recession PPT