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What happens to consumption, investment, and the unemployment rate during a recession?

What happens to consumption, investment, and the unemployment rate during a recession?

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Recession can be referred to as a situation where economic growth is negative. During recession not only does the gross national product falls but also the level of employment is reduced. During recession firms will be producing less, therefore requirement of workers is also low. Also many firms go out of business during recession which leads to high rate of job loss. Therefore unemployment rate increases.

During recession investment also decreases causing a further decrease in the consumption of goods and services. The price level also tend to decrease drastically due to fall in the level of aggregate demand.

Therefore during recession both consumption and investment will be low and unemployment will be high.

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