In economics, a recession is a business cycle contraction, a general slowdown in economic activity.

During recessions, many macroeconomic indicators vary in a s imilar way. Production, as measured by gross domestic product (GDP), employment, investment spending, capacity utilization, household incomes, business profits, and inflation all fall, while bankruptcies and the unemployment rate rise. Recessions generally occur when there is a widespread drop in spending, often fo llowing an adverse supply shock or the bursting of an economic bubble. Governmen ts usually respond to recessions by adopting expansionary macroeconomic policies , such as increasing money supply, increasing government spending and decreasing taxation. Most mainstream economists believe that recessions are caused by inadequate aggr egate demand in the economy, and favor the use of expansionary macroeconomic pol icy during recessions. Strategies favored for moving an economy out of a recessi on vary depending on which economic school the policymakers follow. Monetarists would favor the use of expansionary monetary policy, while Keynesian economists may advocate increased government spending to spark economic growth. Supply-side economists may suggest tax cuts to promote business capital investment. When in terest rates reach the boundary of an interest rate of zero percent conventional monetary policy can no longer be used and government must use other measures to stimulate recovery. Keynesians argue that fiscal policy, tax cuts or increased government spending, will work when monetary policy fails. Spending is more effe ctive because of its larger multiplier but tax cuts take effect faster. Impacts of recession Unemployment:The full impact of a recession on employment may not be felt for se veral quarters. Research in Britain shows that low-skilled, low-educated workers and the young are most vulnerable to unemployment[33] in a downturn. After rece ssions in Britain in the 1980s and 1990s, it took five years for unemployment to fall back to its original levels.[34] Many companies often expect employment di scrimination claims to rise during a recession.[ Business:Productivity tends to fall in the early stages of a recession, then ris es again as weaker firms close. The variation in profitability between firms ris es sharply. Recessions have also provided opportunities for anti-competitive mer gers, with a negative impact on the wider economy: the suspension of competition policy in the United States in the 1930s may have extended the Great Depression . Social effects:The living standards of people dependent on wages and salaries ar e more affected by recessions than those who rely on fixed incomes or welfare be nefits. The loss of a job is known to have a negative impact on the stability of families, and individuals' health and well-being.