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In economics, a recession is a business cycle contraction that occurs when there is a period of broad decline in economic activity. [ 1 ] [ 2 ] Recessions generally occur when there is a widespread drop in spending (an adverse demand shock ).
An economic theory that defines wealth by the amount of precious metals owned. [48] business cycle. Also called the economic cycle or trade cycle. The downward and upward movement of gross domestic product (GDP) around its long-term growth trend. [49] The length of a business cycle is the period of time containing a single boom and contraction ...
Contraction (economics), a general slowdown in economic activity; the opposite of economic expansion Contraction (physics) , change in the volume of matter in response to a change in temperature Lanthanide contraction , the decrease in size of the ionic radius of lanthanide elements with their growing atomic number
In recent years economic theory has moved towards the study of economic fluctuation rather than a "business cycle" [42] – though some economists use the phrase 'business cycle' as a convenient shorthand. For example, Milton Friedman said that calling the business cycle a "cycle" is a misnomer, because of its non
In this view, stagflation is thought to occur when there is an adverse supply shock (for example, a sudden increase in the price of oil or a new tax) that causes a subsequent jump in the "cost" of goods and services (often at the wholesale level). In technical terms, this leads to contraction or negative shift in an economy's aggregate supply ...
Another economic example of this situation in economics is the bank run. The Great Depression was regarded by some as a deflationary spiral. [42] A deflationary spiral is the modern macroeconomic version of the general glut controversy of the 19th century. Another related idea is Irving Fisher's theory that excess debt can cause a continuing ...
The credit cycle is the expansion and contraction of access to credit over time. [1] Some economists, including Barry Eichengreen, Hyman Minsky, and other Post-Keynesian economists, and members of the Austrian school, regard credit cycles as the fundamental process driving the business cycle.
Keynesian economics advocates the use of automatic and discretionary countercyclical policies to lessen the impact of the business cycle. One example of an automatically countercyclical fiscal policy is progressive taxation. By taxing a larger proportion of income when the economy expands, a progressive tax tends to decrease demand when the ...