Which of the following variables is likely to decrease during a recession?

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During a recession, consumer spending is likely to decrease due to a variety of factors that negatively impact consumer confidence and disposable income. When the economy is contracting, individuals often face uncertainty about their job security and may experience reduced incomes or layoffs. As a result, consumers tend to cut back on non-essential expenditures, prioritize saving, or only spend on necessary items. This reduction in consumer spending can further exacerbate the recession by leading to decreased demand for goods and services, which in turn can result in businesses facing lower revenues and potentially making cuts in production and employment.

In contrast, labor productivity may remain stable or even increase in some scenarios during a recession as businesses aim to maintain output with fewer resources. Structural unemployment typically doesn't decrease during a recession; instead, it may remain stable or increase if the recession leads to industry changes and shifts in labor demand. Frictional unemployment, which arises from the time taken to transition between jobs, may not necessarily see a significant decrease either, since individuals may still be seeking new job opportunities even during economic downturns. Thus, the answer highlights the key tendency of consumer behavior during recessionary periods, which directly impacts the overall economy.

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