ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -There is a commensurate rise in unemployment. The growth in the economy continues to decline, and as this falls below the steady growth line, the stage is called a depression.

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. When fewer goods and services are produced, fewer resources are used by firms-including labor.

Detailed explanation-3: -Economic expansion is defined as increased economic activity and growth, measured by the rise in the gross domestic product (GDP), employment, and investment. An economic contraction is the opposite of an expansion. It is when there is a decrease in economic activity and growth.

Detailed explanation-4: -What Is Contraction? Contraction, in economics, refers to a phase of the business cycle in which the economy as a whole is in decline. A contraction generally occurs after the business cycle peaks, but before it becomes a trough.

Detailed explanation-5: -One recent example of a major economic contraction was the one caused by the COVID-19 pandemic, though there have been many over the past century. A contraction ends when prices fall enough to attract renewed demand.