ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -If GDP is falling, then the economy is shrinking-bad news for businesses and workers. If GDP falls for two quarters in a row, that is known as a recession, which can mean pay freezes and lost jobs.

Detailed explanation-2: -An economic downturn affects people’s lives in many ways: through higher unemployment, reduced economic activity, reductions in income and wealth, and greater uncertainty about future jobs and income.

Detailed explanation-3: -If a country’s real gross domestic product declines for two or more quarters, it is indicative of a recession in the business cycle. Negative growth rates are often accompanied by declining real income, increasing unemployment, and reduced production.

Detailed explanation-4: -In most countries, consumer spending is by far the largest component of GDP, followed by government, investment and net exports. When the economy slows down or enters a recession, consumer spending is most affected.