A period of temporary economic decline is known as?

A period of temporary economic decline is referred to as a recession. This term specifically describes a situation where there is a significant decrease in economic activity across the economy, typically recognized by a fall in GDP for two consecutive quarters. Recessions are characterized by a decline in consumer spending, a slowdown in production, and rising unemployment rates.

In contrast, other terms mentioned have different meanings: a depression refers to a prolonged period of economic downturn that is more severe and lasts longer than a recession. Stagnation indicates a long period of little or no growth in the economy, without the sharp downturn seen in recessions, while inflation refers to the general increase in prices and the decrease in purchasing power that can occur in an economy. Understanding these distinctions is crucial for effectively analyzing economic conditions and their impacts on personal finance.