Recession
A recession is a contraction phase of the business cycle characterised by declining real GDP, rising unemployment, and falling business investment. Recessions involve reduced incomes, lower consumer spending, and business failures.
Real World
During the 2008–09 recession, UK GDP fell by over 6%, Woolworths and 800 other high-street retailers collapsed, and unemployment rose from 5.2% to 8%, prompting the Bank of England to slash interest rates from 5% to 0.5%.
Exam Focus
For 'assess' questions on recessions, balance demand-side causes against supply-side causes and evaluate which policy response is most appropriate.
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