Fill in the blank: When employment and production levels in an economy are going down, the economy is said to be heading for a ________.
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → depression
When employment and production are going down, the economy is heading for a depression. When prices are going up, it is an inflation.
NCERT (2026-27): “Introduction … In macroeconomics we usually simplify the analysis of how the country’s total production and the level of employment are related to attributes (called ‘variables’) like prices, rate of interest, wage rates, profits and so on, by focusing on a single imaginary commodity and what happens to it. … Particularly, when these attributes start changing fast, like when prices are going up (in what is called an inflation), or employment and production levels are going down (heading for a depression), the general directions of the movements of these variables for all the individual commodities are usually of the same kind as are seen for the aggregates for the economy as a whole.” |