Question

Which of these is MOST associated with the term "contraction" as it relates to the business cycle?

Growth


Income


Recession


Spending

Answer 1

The answer is: Recession

The term 'contraction' means something that getting smaller.

During recession period, the amount of gross domestic product in the country is relatively low compared to the usual. This coupled with low amount of investment and high number of unemployment. This make the country experience smaller or no economic growth at all during the recession.

Answer 2

Recession is the most associated word to "contraction" as, by definition, a recession is a decline in economic growth (as measured by GDP) in two consecutive periods of measurement.