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Recoveries can also be V-shaped, W-shaped, K-shaped, and U-shaped. As in an L-shaped recovery, these names are based on the shape seen on a chart of relevant economic data.
An L-shaped recovery is the most harmful type of recession and recovery. Because there is a drastic drop in economic growth and the economy does not recover for a significant period of time, an L-shaped recession is often called a depression.
The most important feature that defines an L-shaped recovery is a failure of the economy to progress back toward full employment after a recession.
During an L-shaped recovery, the economy does not readjust and reallocate resources to get workers working and ramp up business operations very quickly.
Large numbers of workers can remain unemployed for extended periods or even leave the workforce entirely.
Likewise, capital goods such as factories and equipment may stand idle or underutilized for extended time-frames as well.
A few economic theories have been advanced as to why and how this can occur. Keynesian economists argue that persistent pessimism, underconsumption, and excessive saving can produce a prolonged period of sub-normal economic activity, and even that this is normal and there is no strong reason to expect the economy to be able to adjust and rebound on its own.
Others point out that L-shaped recoveries can typically be characterized as those in which monetary and fiscal policy interventions actively prevent the economy from adjusting and recovering from the losses of the preceding recession.
All three of these periods are well known for the massive campaigns of expansionary fiscal and monetary policy that were pursued at the time.
Following the stock market crash of the U. Stagnant growth and high unemployment persisted for over a decade.
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How do you think about the answers? You can sign in to vote the answer. Hemant V. Usually there are only two classes for the passnegers And Q class comes in economy class Related: The hardest first-class products to book with points and miles.
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Microeconomics Definition Microeconomics is the branch of economics that analyzes market behavior of individuals and firms in order to understand their decision-making processes.
What Is a Market Economy? A market economy is a system in which economic decisions and pricing are guided by the interactions of citizens and businesses.
Command Economy Definition A command economy is a system where the government determines production, investment, prices and incomes.
Consumer Spending Definition Consumer spending is the amount of money spent on consumption goods in an economy. Everything You Need to Know About Macroeconomics Macroeconomics studies an overall economy or market system, its behavior, the factors that drive it, and how to improve its performance.
Partner Links. Related Articles. Economics Is economics a science? Macro Focus. Archived from the original PDF on October 14, Wall Street Journal.
October 12, RGE Monitor. Archived from the original on July 17, Financial Times. Recessions in the United States and United Kingdom.
Great Slump — Great Frost of Crisis of — — Copper Panic of — Panic of — — — — Post-Napoleonic depression — —23 Panic of — —29 —34 Panic of — and — Long Depression — Depression of — —88 Baring crisis — Panic of — — Panic of — Panic of — Panic of — — — Early s recession — Early s recession Categories : Recessions Economics lists Gross domestic product.