A recession is a business cycle contraction which results in a general slowdown in economic activity.Macroeconomic indicators such as GDP , investment spending, capacity utilization, household income, business profits, and inflation fall, while bankruptcies and the unemployment rate rise.
Recessions generally occur when there is a widespread drop in spending . This may be triggered by various events, such as a financial crisis, an external trade shock, an adverse supply shock or the bursting of an economic bubble. Governments usually respond to recessions by adopting expansionary macroeconomic policies, such as increasing money supply, increasing government spending and decreasing taxation.
A recession has many attributes that can occur simultaneously and includes declines in component measures of economic activity such as consumption, investment, government spending, and net export activity. These summary measures reflect underlying drivers such as employment levels and skills, household savings rates, corporate investment decisions, interest rates, demographics, and government policies.