Answer to Question #94835 in Microeconomics for sarah

Question

How the causes of a recession may differ from the causes of inflation

Answer 1

The causes of recession and inflation are completely different.

A recession is a downturn in business activity and is one of the steps in the business cycle.

The causes of the recession are:

-significant changes in the markets (for example, a sharp change in the price of oil).

-political and psychological reasons (decrease in trust in the authorities).

-rapid growth of the country's debt.

Inflation is a rapid depreciation of money, leading to higher prices.

The causes of inflation are:

-excessive emission of money, which is not accompanied by a corresponding increase in real production.

-devaluation of the national currency.

-excessive demand.

-restrictions on the offer.

-expectation of price growth in the future.

-inflation in other countries with significant volumes of imports.