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Case Assignment 3 - TUI UNIVERSITY Dean J Keveles Module 3...

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TUI UNIVERSITY Dean J. Keveles Module 3 Case Assignment BUS305 Competitive Analysis and Business Cycles Dr. Danielle Babb July 30, 2011
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1. How is a recession defined? Is the U.S. currently in a recession? Explain. I have read several definitions of the term "recession", from numerous sources, but Investopedia.com captures a simple definition: A significant decline in activity across the economy, lasting longer than a few months. It is visible in industrial production, employment, real income and wholesale-retail trade. The technical indicator of a recession is two consecutive quarters of negative economic growth as measured by a country's gross domestic product (GDP); although the National Bureau of Economic Research (NBER) does not necessarily need to see this occur to call a recession. (Investopedia, 2011). Truly, it is a lack of positive activity in all macroeconomic indicators, such as an increased unemployment rate, decrease in trade and product sales, production and services, home sales, foreclosures increase, a slowdown or decrease in investment spending and business profits, etc., further than that of the "normal" business cycle. As can be seen by the table below, published by the US Department of Commerce, Bureau of Economic Analysis (BEA), there has been a gain in the GDP every quarter since the Great Recession of 2008-2009, though seemingly decreasing in gain since 1st quarter 2010. GDP percent change based on current dollars GDP percent change based on chained 2005 dollars 2008q1 0.6 -1.8 2008q2 4.0 1.3 2008q3 -0.6 -3.7 2008q4 -8.4 -8.9 2009q1 -5.2 -6.7 2009q2 -1.1 -0.7 2009q3 1.9 1.7 2009q4 4.9 3.8 2010q1 5.5 3.9 2010q2 5.4 3.8 2010q3 3.9 2.5 2010q4 4.2 2.3 2011q1 3.1 0.4
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2011q2 3.7 1.3 Though, as of this reportable quarter, we are not considered in an economic recession by standards of GDP growth or decrease, and it is not readily evident that the US is heading for a recession based on the information gleaned by the BEA (Bureau of Economic Analysis, 2011), it
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