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?
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A recession is when the economy slows down, meaning people and businesses make less money. As businesses make less money, their profits drop, which means they have less money to spend on things like paying their employees. If businesses have less money to spend, it can mean that people who work for them might lose their jobs or have their wages reduced, making it harder for them to pay for things like food and rent. As a result, more people can become poor.
All the money that people and businesses don’t make during a recession doesn’t just disappear. Instead, it gets put into savings or taken out of the economy. This means that the money isn’t being circulated, and can’t be used to help people and businesses survive.
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