Contraction

Which of the following goal(s) is mostly likely to be in trouble at the peak?

• equity

• full employment

• growth

• price stability

In the business cycle, it is the part when the economy is declining

• Trough

• Expansion

• Contraction

• Peak

Point #2 on the graph indicates a __________ of the business cycle.

• Peak

• Trough

• Contraction

• Expansion

In the context of economics, what does the term 'contraction' refer to?

• A decrease in economic activity

• An increase in employment rates

• A rise in consumer spending

• A period of economic growth

Which of the following is a characteristic of an economic contraction?

• Rising GDP

• Increasing inflation

• Decreasing unemployment

• Falling consumer confidence

During an economic contraction, what typically happens to interest rates?

• They increase

• They decrease

• They remain stable

• They fluctuate unpredictably

What is a common government response to an economic contraction?

• Raising taxes

• Cutting public spending

• Implementing stimulus measures

• Increasing interest rates

Which phase of the business cycle follows a contraction?

• Expansion

• Peak

• Trough

• Recession

How does an economic contraction affect the stock market?

• Stock prices generally rise

• Stock prices generally fall

• Stock prices remain unchanged

• Stock prices become highly volatile

What is the impact of contraction on employment levels?

• Employment levels rise

• Employment levels fall

• Employment levels remain stable

• Employment levels become unpredictable