The Government’s Role in a Recession.
Every society in capitalism has the same goal which is raising the high standard of living for majority subscribe. To success in this goal, the government is required to play an important role to encourage the economy run smoothly and effectively. However, due to the economy cycle that is the periodic fluctuation of the economy include with expansion, prosperity, contraction, and recession. Government should act appropriately in these different situations. Especially when the economy confronts with a recession. Only the appropriate invention from the government can bring the economy go through obstacles. If the government fails to remedy this crisis, it will affect overall the economic activities to disaster. To bring the economy out of recession, the government should implement Keynes’s idea, “The General Theory of Employment, Interest and Money” 1 as an antidote to preserve public interest.
The recession is known as a “significant decline in economic activity, spread across of economy” 1 or “in economists’ term, a recession is defined as two or more consecutive quarters of GDP decline.” 2 As a result, the economy stops growing and goes into reverse. Many economic indicators can reflect the effect from this situation. Instead of increasing opportunity for people to have their own house, it is a “downturn in the real estate market” 3, the major of consumers’ expense which represent as the quality of living. Instead of employment expending, there are more and more unemployed people . Finally, retail sale decelerates continuously because consumers spend less. One of the most important factors for a recession is inflation. It cause economy goes downturn because consumers lose their buying power, they need higher wages whi ...