Question

What is an economic contraction?

Answer 1

contraction is a phase of the business cycle in which the economy as a whole is in decline. Contraction occurs after the business cycle peaks but before it becomes a trough. According to most economists, a contraction is said to occur when a country's real GDP has declined for two or more consecutive quarters.

Answer 2

◆An economic contraction is a decline in national output as measured by gross domestic product.

◆It includes a drop in real personal income, industrial production, and retail sales.

◆It increases unemployment rates.