Question

The term "recession" describes a situation where

an economy's ability to produce is destroyed.


output and living standards decline.


inflation rates exceed normal levels.


government takes a less active role in economic matters.

Answer 1

A recession is a period of decline in total output, income, employment, and trade, usually lasting six months to a year. It is marked by widespread contractions in many sectors of the economy. A depression is a prolonged period of economic recession with a significant decline in income and employment.

Step-by-step explanation:

A recession is a period of decline in total output, income, employment, and trade, usually lasting six months to a year and marked by widespread contractions in many sectors of the economy. It is the contraction phase of the business cycle, beginning after the economy reaches a peak of activity and ending as the economy reaches its trough. During a recession, real GDP (production) decreases for 6 consecutive months and the unemployment rate usually increases.

A depression is a prolonged period of economic recession marked by a significant decline in income and employment, often caused by the same factors that lead to a recession. Depressions are marked by a more severe and extended decline in economic output, which is often measured as a 10% decline in GDP.

The most significant human problem associated with recessions and depressions is the loss of jobs, as firms need to lay off or fire workers due to a slowdown in production. This leads to financial and personal costs for workers and their families, and those who keep their jobs may face stagnant wages or even pay cuts.