A time of declining economic activity when businesses decrease production, unemployment rises, and many consumers have less money to spend is known as

Question

BlackTom AI · Accepted Answer

The prompt asks to identify the term for a period of declining economic activity characterized by decreased production, rising unemployment, and reduced consumer spending.
Option 1: deflation. This term refers to a general decrease in price levels, not specifically to a broad decline in economic activity. While deflation can occur during recessions, the statement here describes activity levels, not prices, so this is not the best match.
Option 2: a recession. A recession is defined as a significant decline in economic activity across the economy lasting more than a few months, typically involving lower production, higher unemployment, and reduced spending—precisely the elements described in the question.
Option 3: prosperity. Prosperity denotes a period of strong economic growth and high activity, the opposite of what the question describes, so this option is incorrect.
Option 4: an economic cycle. While economic cycles include periods of expansion and contraction, the term itself is a broader concept describing fluctuations over time rather than the specific phase characterized by the described downturn, so it’s not the most precise label for this scenario.
Option 5: inflation. Inflation is the rate at which the general level of prices for goods and services rises, eroding purchasing power; this does not describe declining activity, so it does not fit the scenario.
Thus, among the choices, the statement that best aligns with a period of declining economic activity, rising unemployment, and reduced consumer spending is captured by option 2, a recession.

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A time of declining economic activity when businesses decrease production, unemployment rises, and many consumers have less money to spend is known as

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MKT*2500*02.2025FA Chapters 1 to 5- Requires Respondus LockDown Browser

A time of declining economic activity when businesses decrease production, unemployment rises, and many consumers have less money to spend is known as

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MKT250002.2025FA Chapters 1 to 5- Requires Respondus LockDown Browser

During a(n) many firms experience reduced profits, which reduces and investment spending.