ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -The lowest point on the business cycle is a trough, which is characterized by higher unemployment, lower availability of credit, and falling prices.

Detailed explanation-2: -A trough marks a cyclical low point in a time series, although there may be lower points in the time series’ history. A contraction in a time series is the period of decline from a peak to a trough.

Detailed explanation-3: -The trough is the lowest point in an economic contraction, when real GDP stops falling. When an economy is expanding or growing, many people have jobs and many goods and services are being produced and sold.

Detailed explanation-4: -The downswing of the business cycle towards a trough is called an economic contraction. It is associated with: decrease in production/output • increase in unemployment • decrease in wages • decrease in consumer spending.

Detailed explanation-5: -Recovery. After the trough, the economy moves to the stage of recovery. In this phase, there is a turnaround in the economy, and it begins to recover from the negative growth rate. Demand starts to pick up due to low prices and, consequently, supply begins to increase.