Consider the following statements:
The major traits of depression could be as given below:
- an extremely low aggregate demand in the economy causes activities to decelerate
- the inflation being comparatively lower
- the employment avenues start shrinking forcing unemployment rate to grow fast
Which of the above statements are correct ?
1 and 2 only
2 and 3 only
1 and 3 only
1, 2 and 3
Answer is Right!
Answer is Wrong!
This question was previously asked in
UPSC SO-Steno – 2018
An economic depression is characterized by a severe and prolonged decline in economic activity. This involves: 1. A significant drop in aggregate demand, leading to reduced spending and production (deceleration of activities). 2. Low inflation or deflation (falling prices) due to the collapse in demand and economic stagnation. 3. A sharp increase in unemployment as businesses fail and production slows down, leading to widespread job losses.