Recent macroeconomic data suggests that a combination of stubborn supply-side pressures and aggressive monetary tightening has severely dampened economic activity across the Eurozone. With household real incomes squeezed by historically high energy costs, consumer spending has contracted. Concurrently, the European Central Bank (ECB) has repeatedly raised its main refinancing rate to rein in inflation, significantly escalating borrowing costs for businesses and homebuyers. Analysts warn that these compounded demand and supply shocks mean the Eurozone is highly vulnerable to a technical recession in the coming quarters.
Explain the term 'technical recession' and analyse two possible causes of a recession, making reference to the points raised in Extract E.
327 exam-style questions on AQA A Level Economics 2.3 Economic performance, covering 2.3.1 Economic growth and the economic cycle, 2.3.2 Employment and unemployment, 2.3.3 Inflation and deflation, and 2.3.4 Possible conflicts between macroeconomic policy objectives. Each one has a worked solution and a mark scheme showing where the marks go.