Economic growth has been the long-term macroeconomic trend in most nations since the

Industrial Revolution. However, along with this long-term expansion, there have also been short-

term variations, during which the performance of the major macroeconomic indicators has

slowed or even declined over intervals ranging from six months to several years before they

resume their long-term expansion pattern. Recessions are the name given to these transient

decreases. The business cycle typically includes recessions, notwithstanding how unpleasant they

are.

Business failures in droves, frequent bank failures, sluggish or harmful production growth, and

high unemployment are the hallmarks of recessions. Although only short-lived, the economic

suffering brought on by recessions can drastically change an economy. A Real Business Cycle

As a result of their concern over losing their jobs, people who are still employed typically spend

less during recessions. People who are currently unemployed frequently reduce their spending.

The "paradox of thrift," as named by Keynes, can, however, manifest itself when too many

people begin to pare back on their expenditures. When too many people cut back on their

spending, a downward spiral develops that lowers income and increases unemployment since

one person's expenditure is another person's income. The economy as a whole might be harmed

by something that makes sense to one person.