During the recession witnessed in early 2001,many firms laid off their employees and downsized.The reason for this decrease in the demand for employees was:

Question

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During a recession, there is a decrease in the demand for goods and services, which leads to a decrease in the demand for employees. Firms may lay off employees and downsize as they try to cut costs due to reduced demand for their goods and services. Therefore, the reduction in the demand for the final good is the reason for the decrease in the demand for employees. The other options (B, C, D, and E) are not necessarily true during a recession.

During the Recession Witnessed in Early 2001,many Firms Laid Off