Recession Essay Example | Topics and Well Written Essays - 500 words

Recession - Essay Example Inflation is the general rise in the prices of goods and services over a certain period of time. Higher rates of inflation lead to smaller percentages of goods and services that can be purchased with same amount of money. Inflation occurs due to reasons like varied increment in cost production, national debts, and high energy costs (Knoop 69). During inflation periods, people cut out leisure spending, the overall spending and begin saving more than before. As individuals and businesses curtail expenditures, the GDP declines. Unemployment rates, on the other hand, rise as companies lay off employees to cut costs (Knoop 99). These combinations of factors cause the economy to fall into recession. In the last few years, the US have been in a recession. The issue was experienced in 2008 after the irrational exuberance in the housing market had directed most people to purchase houses they could not afford. This happened because everyone thought the prices of housing were likely to increase. Unfortunately, the bubble busted in 2006 as the housing prices started coming down (Knoop 104). The shock caught many homeowners who had taken loans with little money to purchase houses unaware. After realizing they were likely to experience losses by selling houses for less than their mortgage, they foreclosed. The shoot up foreclosure rate made most banks and hedge funds to panic. Consequently, those who had bought mortgage-backed securities on the secondary market began realizing they were facing massive losses. Banks began fearing to lend each other by 2007 due to the urge to evade the toxic loans as collateral. What followed was the $700 billion bail out and high unemployment rate in 20 08. The economic stimulus plan was launched in 2009 by the US government to spend $185 billion (Knoop 213). It led to alteration of four quarter decline in GDP by Q3 in the same year hence ending the recession. However, high unemployment rates persisted up to 2011

Create 5 paragraph ( 5 sentences each) essay that contains a thesis

Create 5 paragraph ( 5 sentences each) that contains a thesis statement - Essay Example In 1980s, three-quarters of the crude oil refined in the U.S. refineries was from local sources, only 25 percent was imported (Montgomery 43). Currently, those trends are reversed. In a relatively quick period of time, only approximately 35 percent of that crude oil is produced locally while 65 percent is imported from foreign markets (Montgomery 46). To compound the problem, emerging Asian markets are contending for more of the global oil supply, and that pushes up the global price of oil. The government has not constructed any new refinery since 1976 (Montgomery 78). To meet the increasing demand for gasoline, America now imports a million barrels of refined gasoline each day. That means about one out of every nine gallons of gas available at the pump is developed in a far-off country. Not only is America dependent on foreign sources of oil, it is becoming more dependent on foreign sources of gasoline. America is one the highest consumer of oil globally. The addiction of the American customs on oil is evident not only from the sheer volume it consumes – the highest in the world- but also from its consumption per person, which outstrips that of any other comparable country. It is double that of northern Europeans. Despite having plentiful supplies of coal, enough to last 250 years, and being the biggest producer of nuclear energy, American is overly dependent on oil for its various industries. For instance, over 96 percent of its transportation is dependent on oil (Montgomery 140). In conclusion, America is too dependent on foreign oil since it has not been self-sufficient in oil since 1950s. The USA continues to be the world’s biggest importer of oil, accounting for around one quarter of total world imports. Nevertheless, there is no viewpoint of the want for imported oil declining in the foreseeable future; indeed all projections forecast an increase. Domestic production is declining while