ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Consumer Spending During a recession, retail sales generally decrease as people have less money to spend. As retail sales decline, the impact on the economy can be substantial. Businesses may have to lay off workers to reduce costs, and some businesses may close.

Detailed explanation-2: -Businesses large and small face declines in sales and profits in a recession. Their efforts to cut costs may include layoffs and cuts in capital spending, marketing, and research. Recessions may curb credit access, slow collections, and spur business bankruptcies.

Detailed explanation-3: -Economic output, employment, and consumer spending drop in a recession. Interest rates are also likely to decline as the central bank (such as the U.S. Federal Reserve Bank) cuts rates to support the economy.

Detailed explanation-4: -Consumers will decrease their spending, putting less money into the economy, which means that companies will report lower earnings. To make matters worse, some investors will liquidate their stocks in response to recession fears, rising inflation and interest rate hikes.