A. Recessions.
The short-run contractions and expansions in economic activity are called recessions.
Recessions are periods of significant decline in economic activity that typically involve a contraction in gross domestic product (GDP), a decline in employment, and a general slowdown in various economic indicators. During a recession, businesses may experience reduced sales, production cuts, and layoffs, leading to a decline in consumer spending and overall economic output.
Recessions are a normal part of the business cycle, which refers to the cyclical pattern of economic expansions and contractions over time. The business cycle consists of four main phases: expansion, peak, contraction (recession), and trough.
During an expansion phase, the economy is growing, characterized by increasing GDP, rising employment, and higher levels of business and consumer confidence. Economic expansions are often associated with increased investment, consumer spending, and business activity.
However, as the business cycle progresses, an expansion phase eventually reaches a peak, which marks the end of the growth period. After the peak, the economy enters a contraction phase, which is commonly referred to as a recession. Recessions are typically characterized by negative GDP growth, rising unemployment rates, reduced business investments, and decreased consumer spending.
Recessions can have significant impacts on individuals, businesses, and governments. They can lead to financial hardships, job losses, reduced incomes, and increased economic inequality. Governments and central banks often implement various fiscal and monetary policies to mitigate the effects of recessions and stimulate economic recovery.
It's important to note that recessions can vary in severity and duration. Some recessions may be relatively mild and short-lived, while others can be more severe and prolonged, impacting the economy for an extended period of time.