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When wages are trending downward and a recession strikes, the decrease in employment will be less pronounced than it would be if wages were rigid, less pronounced when the labor supply is relatively inelastic and softened because part of the declines in labor demand is absorbed by a fall in earnings.
Recessions are defined as extended periods of weak or negative real GDP (output) growth that are accompanied by markedly greater unemployment rates. Many other economic activity metrics are weak during a recession. For instance, consumer spending and corporate investment are often low. In addition, there is an extremely high percentage of businesses that fail as well as people and businesses who are unable to pay their debts.
Because these indications frequently appear when there is a significant increase in the unemployment rate, the unemployment rate is regarded as a reliable and timely summary indicator of a variety of negative changes in an economy.
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When wages are trending downward and a recession strikes, the decrease in employment will be less pronounced than it would be if wages were rigid, less pronounced when the labor supply is relatively inelastic and softened because part of the declines in labor demand is absorbed by a fall in earnings.
Recessions are defined as extended periods of weak or negative real GDP (output) growth that are accompanied by markedly greater unemployment rates. Many other economic activity metrics are weak during a recession. For instance, consumer spending and corporate investment are often low. In addition, there is an extremely high percentage of businesses that fail as well as people and businesses who are unable to pay their debts.
Because these indications frequently appear when there is a significant increase in the unemployment rate, the unemployment rate is regarded as a reliable and timely summary indicator of a variety of negative changes in an economy.
Learn more about Recession here: brainly.com/question/1417711
#SPJ4
