Answer to Question #49759 in Macroeconomics for nana

Question

Explain in 10 lines how recession helps in increasing the unemployment.

Answer 1

Recession is a significant decline in activity across the economy, lasting longer than a few months. The effect of a recession on unemployment is that a recession takes hold, businesses make less money and have to let go of part of their work force. Unemployment rates continue to rise and fewer consumers have the discretionary income needed to boost sales and allow businesses to rebound. So, unemployment is particularly high during a recession, because some firms will go bankrupt meaning all workers lose their jobs and in an effort to reduce costs, firms will cut back on hiring new workers. Therefore, unemployment often affects young people the most. The effect of a recession on unemployment is based on how long the recession lasts and how deeply it has taken root