Chapter 2, Problem 2CYU

To determine

The question requires us to determine who gets hurt and how they get hurt in. a recession.

Explanation of Solution

Recession hurts both the employees and the employers. Due to market slowdown, demand for goods and services falls and thus discourages the producers and forced them to produce less and fire their employers to maintain the costs of production.

Employees lose their jobs and fall into the low wage trap which in turn reduces their living standards and thus their quality of life, while the employers face lower profit or sometimes complete loss in their business which hurts their future confidence in businesses and investments.

Economics Concept Introduction

Recession is a downward phase of a business cycle which mainly represents the less-prolonged market slowdown, low output and high unemployment.