alleryDepression is best characterised in the chapter as:
AA short pause before further expansion
BA phase of rapidly rising input prices
CThe earliest stage of an upswing in output
DThe severe form of recession with negative growth
Answer & Solution
Correct answer: D. The severe form of recession with negative growth
1. The chapter calls depression the severe form of recession.
2. It is marked by sluggish activity, negative growth rate, and rapidly declining income and expenditure.
3. So the correct choice describes it as a severe recession with negative growth.
4. The "rapidly rising input prices" option is ruled out: prices are at their lowest in depression, not rising.
_Source: ICAI BoS CA Foundation Paper 4 Business Economics, Ch 5 "Business Cycles", p.3_
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