Wednesday, May 14, 2008

A few more questions from you...

Phil asked: "What is the technical term for an economic recession? I used to think it was when we have a negative GDP, but if we're in a recession now, it must not be, 'cause I'm pretty sure that our GDP is declining but still positive."

The generally accepted definition is 3 quarters of negative real GDP. Most economists will say we're NOT in a recession, but are heading that way, for exactly the reason you state - we have declining GDP, but not negative. The problem is...when the "r" word comes out, people panic and send it spiraling lower...and lower...and get the idea. Self-fulfilling prophecy, anyone? :)

There are some people who will say that this definition is no good, because (insert any reason here). These are the people who find where we're at now and say "recession! recession!" and when they are told it's not one, don't like being told they don't know. There are other economists who say that there is more to it, but it all comes down to - is GDP in the negative? If not, no recession.

And Melody asked: "is jail always free? i know a guy in fort who went to jail for three years about ten years back. they had him paying 27 dollars a day to pay for his "rent" and food. thats an aweful lot of money when you can't be making any."

I have no clue! I know that when you're in jail or prison, there are often jobs you are able to do for a few cents a day, but it's never that much. It may have been part of his punishment...maybe?

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