Question
During arecession there is increased consumer demand increased competition less discretionary income very little unemployment
Answer
4.2
(208 Votes)
Tobias
Master · Tutor for 5 years
Answer
less discretionary income
Explanation
To analyze the effects of a recession on economic factors, it's important to understand what a recession is and its typical characteristics. A recession is a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales. The impacts of a recession on consumer demand, competition, discretionary income, and unemployment are as follows:1. **Increased Consumer Demand**: Generally, during a recession, consumer demand decreases rather than increases. This is because consumers tend to reduce spending due to uncertainties about the future, job security, and a decrease in income.2. **Increased Competition**: Recessions often lead to increased competition among businesses. As the overall demand for goods and services decreases, businesses compete more aggressively for the reduced number of sales available.3. **Less Discretionary Income**: This is a typical consequence of a recession. Discretionary income is the amount of an individual's income left for spending, investing, or saving after taxes and personal necessities (like food and shelter) are taken care of. During a recession, individuals often face reduced income or job loss, leading to less discretionary income.4. **Very Little Unemployment**: This statement is incorrect in the context of a recession. Typically, unemployment increases during a recession. Businesses, facing lower demand and reduced revenues, may lay off workers to cut costs, leading to higher unemployment rates.Therefore, the correct statements about a recession are increased competition and less discretionary income, not increased consumer demand or very little unemployment.