Question:
Economic recession is characterised by all of the following except
(1) decline in investment and employment.
(2) increase in the price of inputs due to increased demand for inputs.
(3) investors confidence is shaken.
(4) demand for goods and services decline.
(5) existence of excess production capacity of industries.
Correct Answer:
(2)
Answer Explanation:
During a recession, aggregate demand falls. Because firms are producing less, their demand for inputs (like labor and raw materials) also falls, which generally leads to a decrease or stagnation in the price of inputs, not an increase.
Topic: Macroeconomics Year: 2021
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