How can a recession see a drop in profits and a rise in poverty? Where does all the money go, if not to the businesses or people?

Question

How can a recession see a drop in profits and a rise in poverty? Where does all the money go, if not to the businesses or people?

In: 6

Answer 1

What do you mean go? Recession itself is that it means that money doesn’t go… The whole economy slows down, people spend less, either because their wages worth less or prices are higher.

Lower demand slowly decreases prices because the supply hadn’t catched up. Lowering supply means less jobs, less people employed, less money to spend and so on an so forth it is a self reinforcing cycle