ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -As companies lay off workers, consumers lose their jobs and stop buying anything but necessities. That causes a downward spiral and recession. The bust phase stops when supply lowers prices enough to stimulate demand. It occurs when prices are so low that those investors who still have cash start buying again.

Detailed explanation-2: -The downward slope of the business cycle is called economic contraction. A contraction is a period when economic output declines. During this phase, the economy is producing fewer goods and services than it did before.

Detailed explanation-3: -main factors contribute to changes in the business cycle: business decisions; interest rates; consumer expectations; and external issues. When businesses increase production, they increase aggregate supply and help fuel an expansion.

Detailed explanation-4: -A bust is a period of time during which economic growth decreases rapidly. In the stock market, busts usually are associated with bear markets. During busts, inflation decreases, and in extreme cases, can give way to deflation. In addition, unemployment rises, income falls, and aggregate demand decreases.