Do We Actually Need Recessions?: What is a Recession?

The video tutorial explains the concept of recessions, highlighting that while two quarters of negative growth is a common measure, it is more a symptom than a cause. Recessions can be caused by supply shocks, such as natural disasters, or demand shocks, which are more common today. The video uses a hypothetical island to illustrate supply side recessions and discusses how consumer confidence affects demand side recessions.

What is a common measure of a recession?

• Three quarters of negative growth

• Four quarters of negative growth

• One quarter of negative growth

• Two quarters of negative growth

What type of event is used to illustrate a supply-side recession in the video?

• A financial crisis

• A technological breakthrough

• A massive hurricane

• A political election

Why are supply-side recessions rare in large economies like the United States?

• They have advanced technology

• They have diverse and large economies

• They have strict government regulations

• They have a small population

What is a key factor that influences demand-based recessions?

• Consumer confidence

• Technological advancements

• Government policies

• Natural disasters

What happens when consumer spending decreases for more than two quarters?

• A recession occurs

• Economic growth increases

• Unemployment decreases

• Inflation rises