ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -When an economy enters into contraction, real gross domestic product (GDP) growth slows and unemployment rises. A contraction often leads to economic hardship for many people.

Detailed explanation-2: -This phase ends with a peak in economic activity. In a contraction, households demand fewer goods and services, businesses reduce the number of workers they employ and growth in wages and prices slows. This phase ends with a trough in economic activity.

Detailed explanation-3: -Real Gross Domestic Product (GDP) falls when the economy is declining which means unemployment is typically rising. The real GDP measures the amount of goods or services that are provided and produced in an economy and when this is falling there is fewer jobs in the economy.

Detailed explanation-4: -Expansion is a period of economic growth: GDP increases, unemployment declines, and prices rise. The peak marks the end of an expansion and the beginning of the next stage, the contraction. During the contraction, GDP decreases, unemployment rises, and prices remain steady or fall.