What's better a hot economy or a recession?
what would be the pro's and cons of both?
writing small report about banking!
Answer:
Both hot (high inflation) and recession economies have implications that are adverse. But while in recession economy, people are in search of employment and income which becomes difficult to find, in hot economy income and employment is booming but inflation is eating in to the purchasing power of income. Hot economy is beteer in the sense that while you have difficulty in purchasing all that you like you are atleast employed and working. Moreover, it is easier to curb inflation than to lift the economy out of a recession. Recession is also very depressing as well as struggling, while inflation is struggling but not depressing pshycologically.
hot economy
The problem with economics is that there is no definitive answer. A hot economy would mean increased growth and employment but why would you need growth and high employment when all growth is due to price increases no productivity increases and no matter how well paid your job is you cant buy anything with your income due to soaring inflation. On the other hand a recession means high unemployment and reduced incentive for business investment because prices aren't increasing enough to support the risk of entering the market. So really you dont want either.
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