📚 Learning Guide
Explaining Economic Changes
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During a recession, which of the following economic indicators is most likely to decline significantly?

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Learning Path
Learning Path

Question & Answer
1
Understand Question
2
Review Options
3
Learn Explanation
4
Explore Topic

Choose the Best Answer

A

Gross Domestic Product (GDP)

B

Consumer Confidence Index

C

Stock Market Prices

D

Inflation Rate

Understanding the Answer

Let's break down why this is correct

Answer

During a recession, one of the economic indicators that usually declines significantly is unemployment. This happens because businesses often make less money during a recession and may need to cut costs, which often leads to layoffs or hiring freezes. For example, if a company sells fewer products, it might have to let go some of its workers to save money, increasing the unemployment rate. As more people lose their jobs, they have less money to spend, which can further hurt the economy. Therefore, during a recession, rising unemployment is a clear sign that the economy is struggling.

Detailed Explanation

During a recession, people buy less and businesses make less money. Other options are incorrect because Some might think that consumer confidence always drops during a recession; Many believe stock prices always fall during a recession.

Key Concepts

recession
economic indicators
Topic

Explaining Economic Changes

Difficulty

medium level question

Cognitive Level

understand

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