Recession and Boom
An economy goes through cycles, with booms when output rises quickly and recessions when output falls for at least two quarters.
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An economy goes through cycles, with booms when output rises quickly and recessions when output falls for at least two quarters.
- Unemployment rises in recessions
- Governments may boost spending
- Cycles repeat over time
🧠 Quick quiz
Three questions. Score 2 or more to complete the topic.
What is Recession and Boom?
Within Economics & Civics, which covers money, markets, business, government, law and citizenship: how societies are organised and run, this topic explains Recession and Boom. Economics and civics topics explain how money, markets, laws and government affect people, so each topic here pairs a clear definition with a model.
Check that you can explain Recession and Boom in your own words and give one example from everyday life. If you can do that, you have understood the core idea.
Understanding Recession and Boom helps you read the news critically and weigh up policies, choices and arguments about society.
Recession and Boom in detail
The economy moves through a business cycle of expansion, peak, recession and recovery. A boom has fast growth, high employment and rising spending, but may bring inflation. A recession is usually defined as two consecutive quarters of falling GDP, with falling output, rising unemployment and lower confidence.
A deep, long recession is called a depression, as in the 1930s. Causes include financial crises, falling demand, high interest rates or shocks such as pandemics. Governments and central banks respond by cutting interest rates, increasing spending or cutting taxes to boost demand. Cycles cannot be eliminated but can be managed.
How the interactive helps you understand Recession and Boom
Watch the growth curve in the interactive. Use any sliders or buttons it offers to change the values and see how the growth curve responds.
Before you change anything, predict the result. Then change one value at a time and check whether your prediction was right. This is a quick way to build a correct mental model of Recession and Boom.
Real-life uses and examples
- Give a balanced answer about Recession and Boom by considering more than one point of view.
- Relate Recession and Boom to a news story about prices, jobs, elections or government spending.
- Use Recession and Boom to weigh up the pros and costs of a policy or decision.
Common mistakes to avoid
- Confusing a short-term effect with a long-term one.
- Giving an opinion without evidence or a clear economic or civic reason.
- Learning the definition without testing it. Use the quiz and the interactive to check that you can apply the idea.
Frequently asked questions about Recession and Boom
What is Recession and Boom?
An economy goes through cycles, with booms when output rises quickly and recessions when output falls for at least two quarters.
What are the most important points about Recession and Boom?
The main points are: Unemployment rises in recessions; Governments may boost spending; Cycles repeat over time.
Why is Recession and Boom useful?
Understanding Recession and Boom helps you read the news critically and weigh up policies, choices and arguments about society.
How can I practise Recession and Boom?
Open the interactive at the top of this page and change the controls one at a time. Predict the result before each change, then take the three-question quiz. A score of two or more marks the topic as complete on this device.
Which topics are related to Recession and Boom?
Related topics in Economics & Civics include Public Goods, Ethics and Moral Choices, What Is Economics?.