The effects of such a downturn is felt across an entire generation of people and it transforms the mindset of the people as well as the country's economy drastically. An example of such a downturn was the Great Depression of 1929 that saw extremely high levels of unemployment, underemployment and economic suffering.

Economic expansion is a favorable period in which the economic activity increases across all sectors and industries. During this period, there is an increase in GDP, credit is readily available and there is an overall air of prosperity. Economic contraction, on the other hand, is a period during which there is a decline in GDP, the economic growth slows down and unemployment increases. The expansion and contraction are part of a business cycle and they follow each other.

Relationship between these terms

Each of the above-mentioned terms are intertwined with one another. They are an integral part of...
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