ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Trough. In the depression stage, the economy’s growth rate becomes negative. There is further decline until the prices of factors, as well as the demand and supply of goods and services, contract to reach their lowest point. The economy eventually reaches the trough.

Detailed explanation-2: -Recessions often start at the peak of the business cycle-when an expansion ends-and end at the trough of the business cycle, when the next expansion begins.

Detailed explanation-3: -Contraction is the phase that can lead country economy into recession. Contraction phase is a term that is describing an economic phase, phase of a business cycle, when real GDP is falling.

Detailed explanation-4: -Over time, economic activity tends to fluctuate between periods of increasing economic activity, known as economic expansions, and periods of decreasing economic activity, known as recessions. Real gross domestic product (GDP)-total economic output adjusted for inflation-is the broadest measure of economic activity.

Detailed explanation-5: -Key Takeaways The business cycle goes through four major phases: expansion, peak, contraction, and trough. All economies go through this cycle, though the length and intensity of each phase varies.