Sample Thesis Paper

Another concept which is related with recession is of full employment. An economy which is operating at its full potential is said to be at full employment means that all the workforce of that country is contributing towards the economy. Output is said to be at its full potential or full employment level when the labor and other sources of input are utilized at its maximum level.

According to this school of thought recession occurs when GDP falls considerably below the full employment level. Because of these two types of recession occur the first one is one in which output falls significantly below its full employment level and the second one is the condition when the economy’s potential level of output falls (Wessels 2006).

The first type of recession takes place when output falls below it full employment level and consequently unemployment rises. This usually occurs when consumers and investors are hesitant in their aggregate spending. In the second type of recession the economy’s potential output falls different factors play their role in the decline of the full employment output.

Another definition tells us that recession is that state of an economy when the growth of the economy is significantly below normal rate. It is also stated as contraction by some authors and it turns in to depression when the time duration gets prolonged.

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