Which term describes a situation of inactivity in the economy?

Stagnation refers to a prolonged period of little or no growth in the economy, characterized by minimal or nonexistent increases in economic activity, output, and investment. During stagnation, key indicators such as gross domestic product (GDP), employment levels, and consumer spending tend to remain stable or decline, indicating that the economy is not progressing. This lack of economic movement can lead to increased uncertainty for businesses and consumers alike, affecting overall economic health.

In contrast, recession describes a significant decline in economic activity across the economy that lasts for an extended period, typically identified by two consecutive quarters of negative GDP growth. Inflation involves a sustained increase in the general price level of goods and services, leading to a decrease in purchasing power. Deflation is the opposite, characterized by a decline in price levels, which can also signal economic trouble. Understanding these distinctions is critical in analyzing the health and trends of an economy.