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business cycle

A recession is a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales. A recession begins just after the economy reaches a peak of activity and ends as the economy reaches its trough. Between trough and peak, the economy is in an expansion. Expansion is the normal state of the economy; most recessions are brief and they have been rare in recent decades.



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GDP = Savings + Consumption + Government Spending



How deep a recession is depends on the Monetary and Fiscal Policy of the Government.  So, even if we have a recession, it's severity can be managed by the Government policies.



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