Question

In: Economics

What is an expansion? What is a contraction?

What is an expansion? What is a contraction?

Solutions

Expert Solution

The economic exapnsion occurs when there is an overall increase in the economic activity. The economic growth takes place in this period and there is a rise in the real gross domestic product when there is economic expansion.

The economic contraction occurs when there is a decline in the overall economic activity. There is a fall in the real output. There is also a fall in the industrial production, sales and personal income and there is a rise in the unemployment rate.


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