What term describes a significant decline in economic activity across the economy, lasting more than a few months?

The term that describes a significant decline in economic activity across the economy, lasting more than a few months, is recession. A recession is typically marked by a decrease in GDP, rising unemployment rates, decreased consumer spending, and overall negative impacts on the economy. This downturn is often recognized after two consecutive quarters of negative economic growth, though its effects can be felt in various sectors for a longer period.

Understanding a recession is crucial, as it reflects a broader economic environment where businesses may struggle, investments may slow down, and consumer confidence diminishes. In contrast, other terms such as expansion denote economic growth, peak refers to the highest point of economic activity before a decline, and trough indicates the lowest point in the economic cycle just before recovery begins. Each of these concepts plays a role in the economic cycle, but only recession specifically describes the prolonged decline in activity that affects multiple areas of the economy.