A recession is an extended period (usually two consecutive quarters) of significant decline in economic activity. It is marked by reduced production levels, increased unemployment rates, and decreased consumer spending.
Think of a recession as a financial storm that hits the economy. Just like how a storm disrupts normal activities, a recession disrupts economic growth and stability.
Unemployment Rate: The unemployment rate measures the percentage of people in the labor force who are actively seeking employment but unable to find jobs.
Aggregate Demand: Aggregate demand represents the total amount of goods and services that households, businesses, and governments are willing to purchase at different price levels.
Business Cycle: The business cycle refers to the recurring pattern of expansion (growth) and contraction (recession) in an economy over time. It consists of four phases: expansion, peak, contraction, and trough.
What is a recession?
If the economy is in a severe recession, what fiscal policy action would be most effective in stimulating economic activity?
How do automatic stabilizers function during a recession?
What is the purpose of anti-poverty programs during a recession?
During a recession, how do automatic stabilizers affect government finances?
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