ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -In the depression stage, the economy’s growth rate becomes negative. There is further decline until the prices of factors, as well as the demand and supply of goods and services, contract to reach their lowest point.

Detailed explanation-2: -The highest point of the economy, before the recession begins, is called the peak; conversely, the lowest point of a recession, before a recovery begins, is called the trough.

Detailed explanation-3: -The lowest point on the business cycle is a trough, which is characterized by higher unemployment, lower availability of credit, and falling prices.

Detailed explanation-4: -Economic contractions often become recessions. A recession is a significant decline in general economic activity extending over a period of time. A general rule of thumb is that two consecutive quarters of economic contraction constitute a recession.

Detailed explanation-5: -Why Unemployment Rises During a Recession. Because a recession is a slowdown in economic activity and labor is a key economic input, along with capital, it is logical that unemployment would rise as output (what companies make and sell) declines as companies making less and selling less need fewer employees.