Definition
- Recession
- A recession is a significant decline in real GDP, lasting from the peak of the cycle to its trough.
- Not to be confused with: Business cycle
- The business cycle is the economy's movement from peak to trough and trough to peak, as real GDP rises and falls around its long-run trend.
Test yourself
What is the difference between recession and business cycle?
The cycle is the whole wave; a recession is only its falling part.