As recessions begin, income
A) and unemployment both rise.
B) rises and unemployment falls.
C) falls and unemployment rises.
D) and unemployment both fall.

Question

Quizplus · Accepted Answer

As recessions begin, the overall economic activity slows down, leading to a fall in incomes as businesses cut down their production and sales decline. This decline in income results in a rise in unemployment as companies lay off workers to maintain their profit margins. Therefore, the correct option is C, i.e., income falls and unemployment rises during a recession.

As Recessions Begin, Income