In a recession, which statement is true?

In a recession, which statement is true?

• A. Prices rise to combat inflation.
• B. Businesses hire more staff.
• C. All businesses prosper.
• D. GDP, employment and demand are low.

Answer: (D)

In a recession, overall economic activity slows down. Output drops, unemployment rises, and consumer and business demand weaken. That combination means GDP, employment, and demand are low, which is exactly what the true statement describes. The other ideas don’t fit the pattern of a recession. Prices rising to combat inflation would occur in an inflationary period, not during a downturn, and inflation often slows in a recession. Hiring more staff is unlikely when demand is weak and firms cut back on spending, so that’s not characteristic either. Finally, the idea that all businesses prosper contradicts the broad downturns seen in recessions, where many firms struggle.

In a recession, overall economic activity slows down. Output drops, unemployment rises, and consumer and business demand weaken. That combination means GDP, employment, and demand are low, which is exactly what the true statement describes.

The other ideas don’t fit the pattern of a recession. Prices rising to combat inflation would occur in an inflationary period, not during a downturn, and inflation often slows in a recession. Hiring more staff is unlikely when demand is weak and firms cut back on spending, so that’s not characteristic either. Finally, the idea that all businesses prosper contradicts the broad downturns seen in recessions, where many firms struggle.