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A recovery period follows a recession, defined as a decline of up to 10% in GDP, until the economy returns to pre-recession levels. GDP can be calculated in three ways and is used to compare a country’s production. Recovery periods are characterized by increased commodity production, spending, and investment, and a reduction in unemployment. The term can also refer to rest periods in exercise.
In economics, a recovery period follows a recession or depression. A recession is defined as a sustained decline of up to 10% in gross domestic product (GDP), a measure of a country’s total economic output. Drops greater than 10% are considered troughs. Once the GDP picks up again, the economy is said to be in a period of recovery. The recovery period lasts until GDP approaches pre-recession levels.
A country’s gross domestic product can be determined in three ways. One method is to add up the total results of each enterprise class. Another way is to measure the sum of the incomes of all citizens. A final method for determining GDP involves measuring all expenditure of money in a country. Regardless of the method of calculation, GDP is a measure that can be used to compare a country’s total production with that of previous years or other countries around the world.
Over time, a country’s GDP will generally increase as the economy develops and becomes more efficient. In most of the countries, there are cases where the GDP goes down year by year. The causes of these recessions are not well understood and are debated by economists. A recovery period follows a recession and lasts until the economy is once again considered to be at its fullest potential. An economy’s full potential is not an easily measured quantity, but previous years’ GDP levels can be used as a benchmark for economic performance.
A recovery period is typically characterized by an increase in commodity production, spending, and investment. Consumer spending generally increases during a recovery period, as individuals have greater confidence in future economic prospects. The same goes for companies. Most companies are able to pursue growth once they begin a recovery period. Both individuals and businesses tend to increase investment during recovery periods.
Most catching-up periods also experience a reduction in unemployment, although jobless catching-ups or catching-ups with weak job growth are possible. Economist Arthur Okun has observed that unemployment is roughly inversely related to GDP. Trends in job growth during recessions have been the subject of much controversy among politicians and economists. In most cases, however, a recovery period will result in an increase in the total number of jobs in a nation. This is a result of consumers spending more and businesses growing in size.
A recovery period can also refer to other areas, such as exercise. In that case, a rest period between physical activities is considered. This period allows for recovery of both muscles and major body systems, such as cardiovascular and respiratory systems. The length of the rest depends on how long and intensely the person has been exercising.
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