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How Recessions Work


Producers and Consumers
A pedestrian passes before a share prices board in Tokyo, Jan. 22, 2008.
A pedestrian passes before a share prices board in Tokyo, Jan. 22, 2008.
YOSHIKAZU TSUNO/AFP/Getty Images

Broadly speaking, a nation's economy is the production and consumption of goods (food, clothes, cars) and services (repairs, lawn-mowing, haircuts) in that nation. Anybody producing or consuming things in a country (and that's just about everybody) plays some role in the economy.

Production and consumption are intertwined. In order for people to consume things, someone has to produce those things. And in order to produce things, you need to consume things (you need to consume natural resources and people's labor, for example).


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