Finance
What is A recession?
A recession is a significant, widespread decline in economic activity lasting more than a few months. It usually means falling output, rising unemployment, and reduced spending across the economy.
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Watch a 2-minute lesson with voice + animation that explains a recession.
Key things to understand
- 1Often defined as two consecutive quarters of falling GDP.
- 2Marked by job losses, lower spending, and falling business investment.
- 3Causes include financial shocks, high interest rates, or collapses in confidence.
- 4Governments and central banks respond by cutting rates or boosting spending.
Frequently asked questions
- What causes a recession?
- Triggers include financial crises, sharp interest-rate rises, external shocks, or a broad loss of consumer and business confidence.
- How is a recession different from a depression?
- A depression is a far deeper, longer, and more severe downturn than a typical recession.
- How do governments fight recessions?
- By cutting interest rates, increasing spending, and supporting jobs to revive demand.