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E2] LOW
E1] OVER
CONFIDENCE
PRODUCTION
LEVEL
E] Why Recession happens?
E1] OVER
PRODUCTION
Meals supplying company Demand for other goods Started saving money
got the hit come down instead of spending
Producers; Consumers;
Can produce and Can decide to
sell at their prices buy or not;
Both Producers and Consumers are free to act; Not a forced action
G] How to come out of recession?
Hence, Government does not have direct control on Producers’ & the
Consumers’ behavior; But, they can influence millions of Producers &
Consumers with Government’s policies;
More money
1] Reduce reserve
available for bank
ratio
to give loans
If we advise our people to save money, then, the multiplication effect is that
the demand will not pickup and recession will continue; Very peculiar!!!!! But, I
am not misguiding you; Just think from a macro level, if everybody in the
country stops spending, what will happen?