An economic crisis is a stage of scarcity in the production, sale and consumption of products and services.
An economic crisis is a period of scarcity in the production, marketing and consumption of products and services. The economy is cyclical, that is, it combines stages of expansion with phases of contraction. These successive fluctuations are known as the business cycle .
It should be noted that economics (a term that comes from the Greek language and means "management of a house or family" ) is the science that studies the processes of production, exchange and consumption of goods and services . A crisis , on the other hand, is a sudden change or a situation of scarcity .
Emergence of an economic crisis
These principles allow us to affirm that every descent culminates in an ascent and vice versa. The four major phases of an economic cycle are the rise (where economic activity increases until the moment of the boom), the decline (the indicators fall), the recession (when the decline extends for more than two consecutive quarters) and the reactivation . (the indices rise again and the rise begins).
The economic crisis takes place at some point in the downturn. It may be a generalized crisis, with a fall in all indices, or crises that especially affect certain sectors (supply crisis, demand crisis). On the other hand, we speak of a subsistence crisis when a social group cannot satisfy its basic needs .
The economic crisis breaks out within the framework of a phase of economic decline.
Historical examples
One of the most important economic crises in history is the one that took place in 1929 . Great Depression or Crash of '29 are two of the names given to this phenomenon that brought with it consequences of great severity worldwide, and especially in places such as the United States .
Specifically, among the most relevant consequences of that, which originated as a result of a stock market crisis on the New York Stock Exchange , we could highlight the rise in interest rates, the devaluation of the currency and even the paralysis of the phenomenon of what It's immigration .
However, in addition to the aforementioned, we also have to highlight that in 2008 one of the most important economic crises to date began. The Great Recession is also known as the one that affected the entire world.
The United States is also considered the country in which the aforementioned crisis originated, which had among its main causes a crisis in mortgages and credits, excessively high prices of raw materials and also a recognized overvaluation of what the products are.
In the case of Europe , where this crisis was suffered most strongly, the European Central Bank was considered to be guilty to a certain extent since it is believed that, being aware of what was happening, it was not capable of acting and implement measures that could have prevented it.
Financial bubble and economic crisis
Another type of crisis is known as a financial bubble or stock market bubble .
This phenomenon occurs when shares are traded at a price much higher than their intrinsic value until they are no longer purchased and fall abruptly.