ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -A recession can be defined as a sustained period of weak or negative growth in real GDP (output) that is accompanied by a significant rise in the unemployment rate. Many other indicators of economic activity are also weak during a recession.

Detailed explanation-2: -Cyclical unemployment occurs with changes in economic activity over the business cycle. During an economic downturn, a shortfall of demand for goods and services results in a lack of jobs being available for those who want to work.

Detailed explanation-3: -Companies hire less (and may still be laying off), making it more difficult for newly unemployed workers to find their next jobs, and they stay unemployed longer. Rising unemployment is one of a number of indicators that define a recession. It also makes the downturn worse.

Detailed explanation-4: -Historically, unemployment has always increased whenever the aggregate economy experienced a recession. But the rate typically peaks about 15 months after the beginning of the recession, or 4 months after the end of the recession, and then starts to drop gradually over time as the economy recovers (see figure 1).

Detailed explanation-5: -Investopedia / Laura Porter. A recession is a significant, widespread, and prolonged downturn in economic activity. A common rule of thumb is that two consecutive quarters of negative gross domestic product (GDP) growth mean recession, although more complex formulas are also used.