Question

When a country has high unemployment, low consumer spending, and sharply reduced business output, its economy is undergoing what?

Answer 1

When a country experiences high unemployment, low consumer spending, and sharply reduced business output, its economy is undergoing a recession. A recession is characterized by a significant decline in economic activity across the economy that lasts for an extended period, usually defined as two consecutive quarters of negative GDP growth. During a recession, businesses often reduce production due to decreased demand, which can lead to layoffs and higher unemployment, further contributing to the cycle of reduced consumer spending.