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Which of the following goods would usually see the largest decline in demand during a recession?Group of answer choicesCarsFoodClothingHair cuts

Question

Which of the following goods would usually see the largest decline in demand during a recession?

  • Cars
  • Food
  • Clothing
  • Hair cuts
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Solution

During a recession, people tend to cut back on non-essential purchases due to decreased income or financial uncertainty. Here's a step-by-step analysis of each option:

  1. Cars: Cars are considered a big-ticket item. During a recession, people are less likely to make large purchases like this. They might opt to repair their existing vehicle or use public transportation instead.

  2. Food: Food is a basic necessity. While people might switch to cheaper brands or eat out less, the overall demand for food remains relatively stable even during a recession.

  3. Clothing: While clothing is also a necessity, people can often make do with what they already have in times of financial hardship. However, the demand for clothing doesn't usually drop as dramatically as for more expensive items.

  4. Haircuts: Haircuts could be considered a luxury service. During a recession, people might opt to cut their hair at home or extend the time between haircuts to save money.

So, out of these options, cars would usually see the largest decline in demand during a recession.

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