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Arlecino [84]
3 years ago
5

What causes an economic contraction

History
1 answer:
Alex73 [517]3 years ago
8 0

Answer:

An economic contraction is caused by a loss of confidence that slows demand. Persistent trade deficits, wars, revolutions, famines, depletion of important resources, and government-induced hyperinflation have been listed as causes. In some cases, blockades and embargoes caused severe hardships that could be considered an economic collapse

Explanation:

An event, like a stock market correction or crash, triggers it. Central bank monetary policy and government fiscal policy can end a contraction more quickly. The downward slope of the business cycle is called economic contraction. A contraction is a period when economic output declines. During this phase, the economy is producing fewer goods and services than it did before. When fewer goods and services are produced, fewer resources are used by firms—including labor.

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