What occurs in the economy during a recession?

During a recession, the economy experiences a significant downturn characterized by decreased production and rising unemployment. This phenomenon occurs as businesses respond to lower consumer demand by cutting back on production, which often leads to layoffs and higher unemployment rates. When consumers are less confident in the economy, they tend to spend less, which further exacerbates the decline in production and employment levels. Consequently, job losses can lead to reduced income for households, which creates a cycle of decreased spending that can prolong the recession.

In contrast, the other scenarios imply conditions that are typically associated with economic growth rather than a recession. Increased consumer spending and investment reflect a robust economic environment, while rapid economic growth and inflation suggest a thriving economy. Stable prices and full employment are indicators of a healthy economy as well. Therefore, the conditions during a recession directly align with decreased production and rising unemployment, making this the correct choice.