Business Dictionary defines a recession as a period of contraction in the gross domestic product (GDP) for six months or longer, during which retail sales fall, wages stagnate and unemployment rises. EPI adds that recessions also impact education, job opportunities and the formation of new businesses.
Towers Watson indicates that recessions are generally marked by mass layoffs as companies struggle to retain all their staff. The workers who remain are less likely to voluntarily quit their jobs, and it is harder for young workers entering the workforce to find jobs.
Big businesses experience a decline in sales revenues and start to cut costs, including the purchase of new equipment, research and development, and advertising. These efforts to cut costs, in turn, affect other businesses, according to Investopedia.
During a recession, companies may see a decline in their stock prices and shareholders' dividends. As a result of declining profits, companies become less able to repay their debts on time, which can lead to their credit ratings being damaged. Companies that are consistently unable to service their debts declare bankruptcy and go out of business. Smaller businesses are especially susceptible to bankruptcy during recessions, since they typically don't have large cash reserves, notes Investopedia.Learn More
Greece has a capitalist economy with the public accounting for around 40 percent of the gross domestic product, or GDP. The majority of Greece's economy centers around the service sector, which includes such areas as gambling, banking and health care. A sizable portion of the country's economy comes from the tourism industry, which produces around 18 percent of the GDP.Full Answer >
A monopoly contributes to price increases, leads to the creation of inferior products and discourages innovation. Monopolies inhibit free trade and limit the effectiveness of a free-market economy.Full Answer >
Crime affects the economy by placing a financial burden on taxpayers and governments because of increased needs for police, courts and corrections facilities, as well as intangible costs including psychological trauma and reduced quality of life for crime victims, according to Scott Erickson. In an article for The Daily Caller, Erickson cites a 1999 study conducted by economist David Anderson that estimated the cost of crime at $1.7 billion annually.Full Answer >
Poverty compromises the market's access to skilled labor which is essential for production of needed goods and services. Poor people lack access to good health care, which presents challenges in workforce productivity. The economy also spends more on health care for people who can’t afford it. Further, poverty poses greater demands for the criminal justice system, which reduces productivity of those incarcerated and results in property damage for those affected.Full Answer >