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What happens in a recession?

What happens in a recession? what are the consequences of it?

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Expert Solution

There are many consequences of a recession. Some of them are cutting back on investments by the private sector. To stimulate economic growth, the Central Banks may try to cut the interest rates. Due to lower demand, the asset prices of housing and shares will fall. Due to lower demand in the economy, the inflation rate may come down. You can read about the Inflation in Economy- Types of Inflation, Inflation Remedies [UPSC Notes] in the given link.

Due to lower demand, the output in the economy will fall, which will result in lower revenues and profits for companies. This will lead to laying off workers thereby leading to an increase in unemployment rates.

There are many consequences of a recession. 

Sumeet Bharat Jadhav answered 3 years ago
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