An economic recession can result from a lowering of employment rates triggered by a drop in investment, which causes people to cut consumer spending and starts a cycle of layoffs leading back to even lower employment rates.


falling employment rates triggered by a drop in investment, causing cutbacks in consumer spending and starting a cycle of layoffs that lead to even lower employment rates.

falling employment rates that are triggered by a drop in investment, that cause cutbacks in consumer spending and the start of a cycle of layoffs leading to even lower employment rates.

which one is correct and why is the other form incorrect?

When should we use -ing and when is ", that" correct?

Thank you in advance!

refer to this for the explanation on this one http://www.manhattangmat.com/forums/an-economic-recession-can-result-from-a-lowering-t1071.html

Use an -ing form when the modifier is the clause preceding the fragment.
Use that when it has a clear referrent as a pronoun.

In this particular case 'that' is unnecessary because it refers to "drop in investment" and not to "falling employment rates". -ing form however modifies the verb clause correctly.

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