What is a recession?

In economics, a recession is a business cycle contraction that occurs when there is a general decline in economic activity. Recessions generally occur when there is a widespread drop in spending and it may be triggered by various events such as a financial crisis, the bursting of an economic bubble or a large-scale anthropogenic or natural disaster (e.g. a pandemic). Governments usually respond to recessions by adopting expansionary macroeconomic policies such as increasing money supply, decreasing interest rates, increasing government spending or decreasing taxes.