Answer To: ECO 509 ECO 502 – Analysis of Business Conditions Essay 2 Dr. Michael S. Miller Directions: Answer...
Tanmoy answered on Jul 13 2022
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Title: ECO 502 – Analysis of Business Conditions
Contents
Solution 1. 3
Solution 2. 6
Work Cited 10
Solution 1.
Business Memorandum
Date: 11th July, 2022
To
The CEO,
Mrs. Monica Gartner,
Atlantis National Bank
From: Christine Witek
Subject: The important facts of Recession
Due to intense curiosity displayed by the CEO of the Atlantis National Bank on recession, I will be discussing on the significant facts of recession and the way in which the dates are being estimated. Further, we will also determine who regulates the dates on which the recession happens and the various methods used for determining those dates. Finally, we will track and evaluate the data which will be used for analyzing the exact time of the business cycle’s peak and troughs. This will ultimately help Mrs. Monica to know the timing of the cycle which will be significant for Atlantis National Bank. Further, she can compare the impact of recession of banks against its effect on other companies such as Navistar which is famous for making large motor vehicles such as trucks and buses.
Recession is a macroeconomic word which results in substantial deterioration in the common economic activities of the nation or a specific region. In recession there are instances of weakening in the economic activities for two consecutive quarters. Therefore, when there is recession, we can observe decline in the gross domestic products along with various other monthly indicators such as heightened unemployment rate. Further, the impact of recession can be clearly observed through low production by industries, decline in the real-income of the individual citizens of the nation and waning in the wholesale and retail businesses (Anderson).
It is the National Bureau of Economic Research (NBER) who are responsible as well as accountable for determining the starting and end dates of the recession process. More precisely, it the committee which is known as the Business Cycle Dating Committee in NBER which makes decisions related to recession. As per NBER, recession is a drastic reduction in the economic actions which is prevalent across various economies, which can last for even few months or years and its negative impact are highlighted in the real-income, employment, missing various opportunities and in the manufacturing process. Therefore, it can be clearly stated that a period of recession begins when the economy of a nation reaches the peak of the activities and the recession diminishes when it gradually falls to the trough (Jagerson).
It is NBER who looks at various factors which helps to determine if there is a recession or not. But recession is not confined to a particular industry or sector and is comprehensive in nature. It is due to this reason the committee focuses on economy-wide measures of the economic activity. The committee determines the months with respect to the troughs and peaks based on monthly measures with respect to the real economic activity which is issued by the US Federal Statistical Agencies. Hence, for measuring the months of the troughs and peaks the committee deducts the transfers from the real personal income. Further, there is deduction of payroll employment amount which is non-farm in nature, the employment which are evaluated using the survey in the households, the real personal consumption expenses, the sales which are wholesale-retail and is modified due to the changes in prices and the industrial production. Yet there are no specific set of rules or measures which can help to process the data or the manner in which they can be used for evaluating the decisions. But in the last two decades, the NBER committee have put two measures on calculating the real personal income are the transfers and the nonfarm payroll employment.
It is based on the pertinent economic activity in that particular...