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Consider the following statements regarding Recession. 1. A recession is a macroeconomic term that refers to a significant decline in general economic activity in a designated region. 2. A significant rise in spending generally leads to a recession. 3. India had been into recession only once since independence i.e., before Liberalisation. Which of the above statements is/are correct?

Consider the following statements regarding Recession. 1. A recession is a macroeconomic term that refers to a significant decline in general economic activity in a designated region. 2. A significant rise in spending generally leads to a recession. 3. India had been into recession only once since independence i.e., before Liberalisation. Which of the above statements is/are correct? Correct Answer 1 only

The correct answer is 1 only

Key Points

  • A recession is a macroeconomic term that refers to a significant decline in general economic activity in a designated region. Hence, statement 1 is correct.
  • It had been typically recognized as two consecutive quarters of economic decline, as reflected by GDP in conjunction with monthly indicators such as a rise in unemployment.
  • A significant fall in spending generally leads to a recession. Hence, statement 2 is incorrect.
  • Governments usually respond to recessions by adopting expansionary macroeconomic policies, such as increasing money supply or increasing government spending and decreasing taxation.
  • In the past 69 years, India has seen a recession only thrice – as per available data – in fiscals 1958, 1966 and 1980. The reason was the same each time – a monsoon shock that hit agriculture, then a sizeable part of the economy. Hence, statement 3 is incorrect.

Related Questions

In the following question, sentences of a paragraph have been jumbled and labelled as A, B, C and D. You are required to rearrange the jumbled sentences of the paragraph and mark your response accordingly by selecting the correct option. A: Governments usually respond to recessions by adopting expansionary macroeconomic policies, such as increasing money supply or increasing government spending and decreasing taxation. B: This may be triggered by various events, such as a financial crisis, an external trade shock, or a large-scale natural disaster (e.g. a pandemic). C: In economics, a recession is a business cycle contraction when there is a general decline in economic activity. D: Recessions generally occur when there is a widespread drop in spending.
The question below consists of a set of labelled sentences. Out of the four options given, select the most logical order of the sentences to form a coherent paragraph. P: Recession can be defined as a significant decline in general economic activity extending over a period of time.  Q: For example, waking up to find firms and industries downsizing their workforce, prices of basic commodities rising by the minute, cost of healthcare being far from affordable, crime rate and insecurity being the only topic of the day due to the super high cost of living. R: Many professionals and experts around the world believe that a true economic recession can only be confirmed if GDP (Gross Domestic Product) growth is negative for a period of two or more consecutive quarters. S: As inevitable the recession might seem to be to the economic life of the world, its effects have proved to be more widespread and devastating than we can imagine them to be.  
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Given below are four jumbled sentences. Select the option that gives their correct order. The United States and all other modern industrial economies experience significant swings in economic activity. Periods of economic prosperity are typically called expansions or booms; periods of economic decline are called recessions or depressions.  The combination of expansions and recessions, the ebb and flow of economic activity, is called the business cycle. In some years, most industries are booming and unemployment is low; in other years, most industries are operating well below capacity and unemployment is high.
Study the following information carefully and answer the question given below. The following criteria have been introduced for the appointment of a scientist in a research organization. Candidates: 1) Must be a postgraduate in Mathematics/Physics/Chemistry subject with a minimum of 65% marks 2) Age should not be less than 26 years and not more than 35 years as on 01-01-2018 3) Must have a post-doctoral degree with more than 50% marks 4) Should have a minimum of 3 years of experience in the above fields 5) Should be prepared to be under probation for one year If the candidate satisfies all the criteria other than (3), he may be designated as Project Scientist. If the candidate satisfies all the above criteria other than (3) and (4) he may be referred for the post of Junior Scientist. If the candidate fulfills all the above criteria with 7 years of experience in the relevant fields, he/she can be designated as a Senior Scientist. If the candidate fulfills all the above criteria with 12 years of experience in the relevant field, he/she can be designated as Principal Scientist. Varun's age is 27 years as of 1/1/18, he obtained his bachelor's and master's degree in chemistry with 72% and 76% marks respectively. He also had 4 years of experience in the relevant field and was ready to be under probation for one year of the job. to what position he may be assigned
Consider the statements about Crowding Out Effect 1. It is a situation when increased interest rates lead to a reduction in private investment spending such that it dampens the initial increase of total investment spending. 2. Government increases the spending for economic growth then it may lead to crowding out of funding. 3. Fiscal deficit may lead to the crowding out effect. Which of the statements given above is/are correct?
Consider the following statements with reference to the Macroeconomic Vulnerability index. 1. Macroeconomic Vulnerability Index is released by IMF yearly. 2. This Index adds together the rate of inflation, current account deficit, and fiscal deficit of a country. Which of the statements given above is/are correct?
Consider the following statements about the Comptroller and Auditor General of India. 1. The office of the Comptroller and Auditor General in the Constitution of India is substantially modeled upon that of the Auditor-General of India Act, 1935. 2. The Comptroller and Auditor General may be removed only on an address from both Houses of Parliament on the grounds of 'proved misbehavior' or 'incapacity'. 3. The term of office of the Comptroller and Auditor General shall be five years from the date on which he assumes office. Which of the statements given above is/are correct?
Consider the following statements regarding the Prime Minister’s Economic Advisory Council (PMEAC): 1. It is a statutory and permanent body. 2. It analyzes any economic issue referred to it by the Prime Minister and advises him thereon. 3. It submits periodic reports to the Prime Minister, related to macroeconomic developments and issues. Which of the statements given above is/are correct?
Read the passage carefully and choose the best answer to each question out of the four alternatives and click the button corresponding to it.
Fever in the season of dengue is sending Calcuttans scurrying to hospitals for admission, triggering a shortage of beds that has forced some private health care institutes to even postpone planned surgeries. Apollo Gleneagles Hospitals on the Bypass had 504 patients in its care as on Thursday of whom 70 had been admitted with fever. Belle Vue Clinic had 180 patients, 32 of them with dengue. Calcutta Medical Research Institute had 350 patients 60 of them with fever. The number of people admitted for treatment of fever caused by dengue or any undiagnosed illness has been rising every day across hospitals for more than a fortnight. "There has been heavy pressure on all private hospitals for admission of dengue and cases of unknown fever since the beginning of August. Now it is a surge," said Pradip Tondon, President of the Association of Hospitals of Eastern India. In July, four to five patients were getting admitted with fever on an average in every hospital. The number has since ballooned with the Calcutta Municipal Corporation apparently in denial about the extent of the dengue outbreak and the Government focused on playing down the threat. Such has been the rush of patients with fever that some hospitals are calling up people to postpone admissions planned in advance, mostly for surgeries. "We have told many people to come only when we call them to confirm availability of beds," said an official at Belle Vue.
The rush in hospitals has been rising