Question

During a recession the economy experiences a. rising employment and income. b. rising employment and falling income. c. rising income and falling employment. d. falling employment and income.

Answer 1

Answer:

Falling employment and income

Explanation:

Recession is period in the economy of a country or region during which there is a huge decline the economic activity of he country or region and the decrease in the economic activity ( trade and industrial activity ) will bring about a decrease in employment and also A decline in the income of the Nation.

In short terms Recession is the decline in the GDP of a nation over two successive financial quarters of the Nation. there is a devalue of the Nation currency and this will affect foreign exchange of the country.

Answer 2

Answer: Option (b) is correct.

Explanation:

Correct option: Rising employment and falling income.

According to Keynes, the main cause of recession is inadequate aggregate demand. When the total demand for goods and services falls as a result sales of the firms decreases.

Lower demand for the products induce firms to cut down their production which results in unemployment. So, unemployment increases and lower profits further depressed demand for the goods and services. This will also lead to further reduction in income level.

Hence, during a period of recession an economy experiencing a higher unemployment and lower income.