CHAPTER19

Recessions and Depressions

In This Chapter

  • How recessions affect the economy
  • Deleveraging debt
  • The causes and characteristics of recessions
  • Major schools of thought on the business cycle and recessions

Booms and busts, or economic expansions and contractions, are the hallmark of the business cycle. While the booms will inevitably end—sometimes painfully when sudden and unexpected—living through a boom is not all bad, since they are accompanied by low unemployment and high output. If they spark inflation, the central bank can usually increase interest rates to control the rise in prices. The aftermath—the bust—is the topic of this ...

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