What is the characteristic of a downturn in the business cycle?

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An economic downturn is defined by lower growth and more unemployment. This is when businesses might experience lower demand due to factors like instability on global markets, unfavorable economic conditions and others.

Consequently, companies are likely to take steps towards conserving cash by cutting costs & minimizing investments in order to remain viable during these uncertain times. This is usually seen through layoffs or hiring freezes as well as curtailed spending on research & development activities etc.

Furthermore, banks tend to tighten their lending standards during recessions which can result in decreased availability of capital for companies who wish to finance expansion plans – thus further exacerbating negative impacts from an already weakened economy.

In conclusion, downturns are typically characterized by negative economic indicators such as slow growth & high unemployment rates; making it a difficult period for most businesses who must take proactive steps towards mitigating risk & ensuring their sustainability going forward.

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