Reasons of recession and its relationship with Maersk’s problem in 2011. Concept Introduction: Recession: Every economy faces different business cycles at different points of time. Recession is one such business cycle. During recession, there is a huge unemployment and a fall in production of goods and services. Recession slows down the business activities. The main reason for such phenomenon is the lack of demand and low investment level. When the recession is for longer duration it is known as depression. Causes of Recession: Given below are the causes of recession: Rise in oil price: When the price of oil increases the price of every commodity rise due to increase in input cost. Fall in cost of housing: When there is a fall in prices of house, the wealth of household decreases compelling them to spend less on consumption of goods. Loss in consumer confidence: This leads to decrease in consumption level as people think that the economy is going through bad condition. Credit Crunch: It is the situation when people do not have money to invest or consume as the loans are not easily accessible. Rise in Interest Rate: It lowers the amount of investment in an economy which results in low output and employment level.

Question

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Answer 1

Question

Chapter 27, Problem 1BCQ

To determine

Reasons of recession and its relationship with Maersk’s problem in 2011.

Concept Introduction:

Recession: Every economy faces different business cycles at different points of time. Recession is one such business cycle. During recession, there is a huge unemployment and a fall in production of goods and services. Recession slows down the business activities.

The main reason for such phenomenon is the lack of demand and low investment level. When the recession is for longer duration it is known as depression.

Causes of Recession: Given below are the causes of recession:

Rise in oil price: When the price of oil increases the price of every commodity rise due to increase in input cost.

Fall in cost of housing: When there is a fall in prices of house, the wealth of household decreases compelling them to spend less on consumption of goods.

Loss in consumer confidence: This leads to decrease in consumption level as people think that the economy is going through bad condition.

Credit Crunch: It is the situation when people do not have money to invest or consume as the loans are not easily accessible.

Rise in Interest Rate: It lowers the amount of investment in an economy which results in low output and employment level.

Expert Solution & Answer

Explanation of Solution

In 2011, company M was going through bad times. Due to sudden rise in prices, up to almost $700 per ton, it suffered reduction in the profit by more than $1 billion.

This further aggravated the problem of shipping industry and led to slowdown in the world trade.

From the given case study, the cause of recession is inflation which means there is continuous rise in price of goods and services.

Due to increase in oil prices shippers started turning down to slow steaming method in which ship used to get better fuel economy by moving more slowly at 17 knots rather than 20 knots which was the usual speed.

Conclusion:

Thus, inflation was certainly related to causes of recession as the cause in this case was inflation.

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Answer 2

Question

Chapter 27, Problem 1BCQ

To determine

Reasons of recession and its relationship with Maersk’s problem in 2011.

Concept Introduction:

Recession: Every economy faces different business cycles at different points of time. Recession is one such business cycle. During recession, there is a huge unemployment and a fall in production of goods and services. Recession slows down the business activities.

The main reason for such phenomenon is the lack of demand and low investment level. When the recession is for longer duration it is known as depression.

Causes of Recession: Given below are the causes of recession:

Rise in oil price: When the price of oil increases the price of every commodity rise due to increase in input cost.

Fall in cost of housing: When there is a fall in prices of house, the wealth of household decreases compelling them to spend less on consumption of goods.

Loss in consumer confidence: This leads to decrease in consumption level as people think that the economy is going through bad condition.

Credit Crunch: It is the situation when people do not have money to invest or consume as the loans are not easily accessible.

Rise in Interest Rate: It lowers the amount of investment in an economy which results in low output and employment level.

Expert Solution & Answer

Explanation of Solution

In 2011, company M was going through bad times. Due to sudden rise in prices, up to almost $700 per ton, it suffered reduction in the profit by more than $1 billion.

This further aggravated the problem of shipping industry and led to slowdown in the world trade.

From the given case study, the cause of recession is inflation which means there is continuous rise in price of goods and services.

Due to increase in oil prices shippers started turning down to slow steaming method in which ship used to get better fuel economy by moving more slowly at 17 knots rather than 20 knots which was the usual speed.

Conclusion:

Thus, inflation was certainly related to causes of recession as the cause in this case was inflation.

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Answer 3

Question

Chapter 27, Problem 1BCQ

To determine

Reasons of recession and its relationship with Maersk’s problem in 2011.

Concept Introduction:

Recession: Every economy faces different business cycles at different points of time. Recession is one such business cycle. During recession, there is a huge unemployment and a fall in production of goods and services. Recession slows down the business activities.

The main reason for such phenomenon is the lack of demand and low investment level. When the recession is for longer duration it is known as depression.

Causes of Recession: Given below are the causes of recession:

Rise in oil price: When the price of oil increases the price of every commodity rise due to increase in input cost.

Fall in cost of housing: When there is a fall in prices of house, the wealth of household decreases compelling them to spend less on consumption of goods.

Loss in consumer confidence: This leads to decrease in consumption level as people think that the economy is going through bad condition.

Credit Crunch: It is the situation when people do not have money to invest or consume as the loans are not easily accessible.

Rise in Interest Rate: It lowers the amount of investment in an economy which results in low output and employment level.

Expert Solution & Answer

Explanation of Solution

In 2011, company M was going through bad times. Due to sudden rise in prices, up to almost $700 per ton, it suffered reduction in the profit by more than $1 billion.

This further aggravated the problem of shipping industry and led to slowdown in the world trade.

From the given case study, the cause of recession is inflation which means there is continuous rise in price of goods and services.

Due to increase in oil prices shippers started turning down to slow steaming method in which ship used to get better fuel economy by moving more slowly at 17 knots rather than 20 knots which was the usual speed.

Conclusion:

Thus, inflation was certainly related to causes of recession as the cause in this case was inflation.

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Answer 4

Question

Chapter 27, Problem 1BCQ

To determine

Reasons of recession and its relationship with Maersk’s problem in 2011.

Concept Introduction:

Recession: Every economy faces different business cycles at different points of time. Recession is one such business cycle. During recession, there is a huge unemployment and a fall in production of goods and services. Recession slows down the business activities.

The main reason for such phenomenon is the lack of demand and low investment level. When the recession is for longer duration it is known as depression.

Causes of Recession: Given below are the causes of recession:

Rise in oil price: When the price of oil increases the price of every commodity rise due to increase in input cost.

Fall in cost of housing: When there is a fall in prices of house, the wealth of household decreases compelling them to spend less on consumption of goods.

Loss in consumer confidence: This leads to decrease in consumption level as people think that the economy is going through bad condition.

Credit Crunch: It is the situation when people do not have money to invest or consume as the loans are not easily accessible.

Rise in Interest Rate: It lowers the amount of investment in an economy which results in low output and employment level.

Expert Solution & Answer

Explanation of Solution

In 2011, company M was going through bad times. Due to sudden rise in prices, up to almost $700 per ton, it suffered reduction in the profit by more than $1 billion.

This further aggravated the problem of shipping industry and led to slowdown in the world trade.

From the given case study, the cause of recession is inflation which means there is continuous rise in price of goods and services.

Due to increase in oil prices shippers started turning down to slow steaming method in which ship used to get better fuel economy by moving more slowly at 17 knots rather than 20 knots which was the usual speed.

Conclusion:

Thus, inflation was certainly related to causes of recession as the cause in this case was inflation.

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Answer 5

Chapter 27, Problem 1BCQ

To determine

Reasons of recession and its relationship with Maersk’s problem in 2011.

Concept Introduction:

Recession: Every economy faces different business cycles at different points of time. Recession is one such business cycle. During recession, there is a huge unemployment and a fall in production of goods and services. Recession slows down the business activities.

The main reason for such phenomenon is the lack of demand and low investment level. When the recession is for longer duration it is known as depression.

Causes of Recession: Given below are the causes of recession:

Rise in oil price: When the price of oil increases the price of every commodity rise due to increase in input cost.

Fall in cost of housing: When there is a fall in prices of house, the wealth of household decreases compelling them to spend less on consumption of goods.

Loss in consumer confidence: This leads to decrease in consumption level as people think that the economy is going through bad condition.

Credit Crunch: It is the situation when people do not have money to invest or consume as the loans are not easily accessible.

Rise in Interest Rate: It lowers the amount of investment in an economy which results in low output and employment level.

Expert Solution & Answer

Explanation of Solution

In 2011, company M was going through bad times. Due to sudden rise in prices, up to almost $700 per ton, it suffered reduction in the profit by more than $1 billion.

This further aggravated the problem of shipping industry and led to slowdown in the world trade.

From the given case study, the cause of recession is inflation which means there is continuous rise in price of goods and services.

Due to increase in oil prices shippers started turning down to slow steaming method in which ship used to get better fuel economy by moving more slowly at 17 knots rather than 20 knots which was the usual speed.

Conclusion:

Thus, inflation was certainly related to causes of recession as the cause in this case was inflation.

Answer 6

Chapter 27, Problem 1BCQ

To determine

Reasons of recession and its relationship with Maersk’s problem in 2011.

Concept Introduction:

Recession: Every economy faces different business cycles at different points of time. Recession is one such business cycle. During recession, there is a huge unemployment and a fall in production of goods and services. Recession slows down the business activities.

The main reason for such phenomenon is the lack of demand and low investment level. When the recession is for longer duration it is known as depression.

Causes of Recession: Given below are the causes of recession:

Rise in oil price: When the price of oil increases the price of every commodity rise due to increase in input cost.

Fall in cost of housing: When there is a fall in prices of house, the wealth of household decreases compelling them to spend less on consumption of goods.

Loss in consumer confidence: This leads to decrease in consumption level as people think that the economy is going through bad condition.

Credit Crunch: It is the situation when people do not have money to invest or consume as the loans are not easily accessible.

Rise in Interest Rate: It lowers the amount of investment in an economy which results in low output and employment level.

Expert Solution & Answer

Explanation of Solution

In 2011, company M was going through bad times. Due to sudden rise in prices, up to almost $700 per ton, it suffered reduction in the profit by more than $1 billion.

This further aggravated the problem of shipping industry and led to slowdown in the world trade.

From the given case study, the cause of recession is inflation which means there is continuous rise in price of goods and services.

Due to increase in oil prices shippers started turning down to slow steaming method in which ship used to get better fuel economy by moving more slowly at 17 knots rather than 20 knots which was the usual speed.

Conclusion:

Thus, inflation was certainly related to causes of recession as the cause in this case was inflation.

Answer 7

Chapter 27, Problem 1BCQ

To determine

Reasons of recession and its relationship with Maersk’s problem in 2011.

Concept Introduction:

Recession: Every economy faces different business cycles at different points of time. Recession is one such business cycle. During recession, there is a huge unemployment and a fall in production of goods and services. Recession slows down the business activities.

The main reason for such phenomenon is the lack of demand and low investment level. When the recession is for longer duration it is known as depression.

Causes of Recession: Given below are the causes of recession:

Rise in oil price: When the price of oil increases the price of every commodity rise due to increase in input cost.

Fall in cost of housing: When there is a fall in prices of house, the wealth of household decreases compelling them to spend less on consumption of goods.

Loss in consumer confidence: This leads to decrease in consumption level as people think that the economy is going through bad condition.

Credit Crunch: It is the situation when people do not have money to invest or consume as the loans are not easily accessible.

Rise in Interest Rate: It lowers the amount of investment in an economy which results in low output and employment level.

Answer 8

Expert Solution & Answer

Explanation of Solution

In 2011, company M was going through bad times. Due to sudden rise in prices, up to almost $700 per ton, it suffered reduction in the profit by more than $1 billion.

This further aggravated the problem of shipping industry and led to slowdown in the world trade.

From the given case study, the cause of recession is inflation which means there is continuous rise in price of goods and services.

Due to increase in oil prices shippers started turning down to slow steaming method in which ship used to get better fuel economy by moving more slowly at 17 knots rather than 20 knots which was the usual speed.

Conclusion:

Thus, inflation was certainly related to causes of recession as the cause in this case was inflation.