UPSC Exam > UPSC Questions > Consider the following statementsI) Recession...
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Consider the following statements
I) Recession reduces the demands for goods and services
II) Recession leads to unemployment
III) Government interference is desirable to reverse the recessionary trends
Which of above statements is/ are true about Recession
- a)Only I
- b)Only II
- c)I,II,III
- d)None of above
Correct answer is option 'C'. Can you explain this answer?
Most Upvoted Answer
Consider the following statementsI) Recession reduces the demands for ...
The correct answer is option C) I, II, III.
Explanation:
I) Recession reduces the demand for goods and services:
During a recession, there is a decline in economic activity, which leads to a decrease in consumer spending. This decline in demand for goods and services is a characteristic feature of a recession. When people face uncertainties about their financial situation, they tend to reduce their spending and save more. This reduction in demand for goods and services causes businesses to produce less, leading to a decrease in production and economic growth.
II) Recession leads to unemployment:
During a recession, businesses experience a decline in demand for their products or services. As a result, they may have to cut costs, which often includes reducing their workforce. When businesses lay off employees or fail to hire new workers, the unemployment rate increases. This is because there are fewer job opportunities available, and individuals who were previously employed may struggle to find new employment during a recession.
III) Government interference is desirable to reverse the recessionary trends:
When a recession occurs, it is often necessary for the government to intervene in order to reverse the negative trends in the economy. Government intervention can take various forms, such as implementing fiscal and monetary policies. These policies aim to stimulate economic growth and increase aggregate demand. For example, the government may increase its spending on infrastructure projects, provide tax incentives to businesses, or lower interest rates to encourage borrowing and investment. These measures help to boost economic activity, create jobs, and restore confidence in the economy.
Overall, all three statements are true about recessions. A recession leads to a decrease in the demand for goods and services, an increase in unemployment, and requires government intervention to reverse the negative economic trends.
Explanation:
I) Recession reduces the demand for goods and services:
During a recession, there is a decline in economic activity, which leads to a decrease in consumer spending. This decline in demand for goods and services is a characteristic feature of a recession. When people face uncertainties about their financial situation, they tend to reduce their spending and save more. This reduction in demand for goods and services causes businesses to produce less, leading to a decrease in production and economic growth.
II) Recession leads to unemployment:
During a recession, businesses experience a decline in demand for their products or services. As a result, they may have to cut costs, which often includes reducing their workforce. When businesses lay off employees or fail to hire new workers, the unemployment rate increases. This is because there are fewer job opportunities available, and individuals who were previously employed may struggle to find new employment during a recession.
III) Government interference is desirable to reverse the recessionary trends:
When a recession occurs, it is often necessary for the government to intervene in order to reverse the negative trends in the economy. Government intervention can take various forms, such as implementing fiscal and monetary policies. These policies aim to stimulate economic growth and increase aggregate demand. For example, the government may increase its spending on infrastructure projects, provide tax incentives to businesses, or lower interest rates to encourage borrowing and investment. These measures help to boost economic activity, create jobs, and restore confidence in the economy.
Overall, all three statements are true about recessions. A recession leads to a decrease in the demand for goods and services, an increase in unemployment, and requires government intervention to reverse the negative economic trends.
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Consider the following statementsI) Recession reduces the demands for ...
A Recession has a domino effect, where increased unemployment leads to less growth and a drop in consumer spending, affecting businesses, which lay off workers due to losses. A recession occurs when there are two or more consecutive quarters of negative gross domestic product (GDP) growth. Factors that Cause Recessions. High interest rates are a cause of recession because they limit liquidity, or the amount of money available to invest. Another factor is increased inflation. Inflation refers to a general rise in the prices of goods and services over a period of time.
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Consider the following statementsI) Recession reduces the demands for goods and servicesII) Recession leads to unemploymentIII) Government interference is desirable to reverse the recessionary trendsWhich of above statements is/ are true about Recessiona)Only Ib)Only IIc)I,II,IIId)None of aboveCorrect answer is option 'C'. Can you explain this answer?
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