Explain the concept of economic recession in a capitalist economy.

Explain the concept of economic recession in a capitalist economy.

In a capitalist economy, an economic recession refers to a period of significant decline in economic activity. It is characterized by a contraction in the overall output of goods and services, a decrease in consumer spending, a rise in unemployment rates, and a decline in business profits. This downturn is typically caused by various factors such as a decrease in consumer confidence, a decline in investment, or a financial crisis. During a recession, businesses may reduce production, lay off workers, and cut costs in order to survive. The government often implements measures such as fiscal and monetary policies to stimulate economic growth and alleviate the negative impacts of the recession.