How a recession starts and ends
Process map by Brian. 11 steps, 1 layer. Tags: economics, business, finance, inflation.
- Central bank: Interest rates rise to fight inflation
- Households: Loans and mortgages cost more, so people spend less
- Businesses: Sales fall and firms stop hiring
- Businesses: Do sales keep falling?
- Businesses: Layoffs begin
- Households: Even less spending
- Government: Output falls for two quarters: a recession is called
- Central bank: Cut rates to make borrowing cheap
- Government: Spend more and cut taxes to restart demand
- Businesses: Hiring picks up and growth returns
- Central bank: The economy cools but holds: a soft landing