ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Explanation: During a recession, consumption and investment, both types of spending will decrease, but it can be said that the consumption spending will decrease more than the investment spending.

Detailed explanation-2: -Predictably, consumers expect to decrease net spending on nonessentials such as clothing, increase deal hunting, and substitute lower-cost brands and alternatives. The category that consumers across multiple countries most consistently point to as an area where they are likely to reduce their spending is clothing.

Detailed explanation-3: -Consumers also tend to cut back spending on durable goods during recessions. While aggregated Bank of America card data points to a slowdown in furniture spending, it is coming down from very high levels seen in the last two years. Travel spending also usually drops during recessions.

Detailed explanation-4: -That said, if you have cash to invest, you may want to consider buying recession-friendly sectors such as consumer staples, utilities and healthcare. Stocks that have been paying a dividend for many years are also a good choice. These tend to be long-established companies that can withstand a downturn.

Detailed explanation-5: -Economic recessions can be caused by many different elements, including loss of consumer confidence, high interest rates, a stock market crash, and asset bubbles bursting. Most events that will cause the economy to slow down can also lead to a recession if left unchecked.