Question: What is a Recession?
Answer: Most of us have an intuitive idea of what a recession entails - job losses, plant closures and tough times for families. But what exactly is a recession? There are a few similar, but not identical definitions. To learn what economists mean by a recession, see:
Do We Have to Have Recessions?Recessions are part of what is known as the business cycle. The occasional recession appears to be unavoidable, but there is some debate on whether or not recessions are good for the economy. Learn more about the business cycle and whether or not recessions are good for the economy here:
What Causes Recessions?There are a number of theories on what causes recessions. Some observers believe each recession has a unique cause, whereas others believe recessions generally have a single cause, such as bad investments (malinvestment) by firms. It is occasionally heard that recessions and depressions, such as the Great Depression, are caused by stock market crashes. Others believe that globalization has changed the the nature of the business cycle. To learn more, see:
- Do Changes in Stock Prices Cause Recessions?
- Globalization, Unemployment and Recessions. What is the Link?