Which scenario best describes the situation in a recession?

The scenario that best describes a recession is one characterized by declining consumer spending. During a recession, economic activity slows down, leading to decreased demand for goods and services. As consumers become more cautious about their financial situations, they tend to cut back on spending. This reduction in consumer expenditure can result from a combination of factors, such as job losses, decreased income, and general economic uncertainty. Consequently, when consumer spending declines, businesses may experience lower sales and may respond by reducing production, freezing hiring, or even letting employees go, further exacerbating the recession.

The other scenarios listed do not accurately depict the economic realities of a recession. Increased employment rates and higher disposable income typically occur during periods of economic expansion, not contraction. Similarly, stable economic growth would signify a healthy economy rather than the slowdown associated with a recession.